Are Visa & Mastercard fees hurting retailers? EU regulators investigate
EU regulators have launched an investigation into Visa and Mastercard’s fee structures amid concerns that these charges could be financially burdening retailers. As the probe advances, the spotlight is on transparency and the potential impact on European businesses.
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Marina Mouka
- November 7, 2024
- 3 minutes
EU antitrust regulators are investigating whether Visa and Mastercard’s fees could be negatively impacting retailers, according to a European Commission document reviewed by Reuters. The probe, which includes a series of detailed questionnaires to retailers and payment service providers, aims to determine if fees charged by the payment giants are fair or if they hinder competition.
The investigation centres on “scheme fees,” mandatory charges that Visa and Mastercard impose on businesses participating in their payment networks. These fees cover essential payment processing services like authorisation, clearing, and settlement, but have prompted complaints about their transparency and escalating costs.
The questionnaires, sent in September with responses due by October, ask if retailers and service providers in the European Economic Area (EEA)—covering the EU’s 27 member states plus Iceland, Liechtenstein, and Norway—are burdened by these fees. Specific queries focus on fee negotiations, whether new charges are introduced without retailer consultation, and if these fees have increased significantly since 2016.
A Visa spokesperson confirmed receipt of the EU’s information request, saying the company is working to “supply the relevant information.” Mastercard responded similarly, describing the request as part of regulators’ efforts to gain insights into industry practices.
For retailers, the stakes are high. EuroCommerce, a trade body representing major European retailers like Amazon, Carrefour, and IKEA, has criticised Visa and Mastercard’s fees, arguing that they undercut savings intended by the EU’s 2015 Interchange Fee Regulation, which capped fees on cross-border card transactions.
“We estimated in 2022 this was costing the EU economy some 1.5 billion euros yearly,” EuroCommerce noted, adding that scheme fee increases are eating away at potential savings.
The investigation also examines “processing fees,” charged by card system operators for technical functions essential to processing payments. Additionally, the Commission wants insight into “behavioural” and “compliance” fees, imposed for rule enforcement, and whether their costs and justifications are adequately communicated to retailers.
These escalating costs are not isolated to the EU. In May, the UK’s Payment Systems Regulator (PSR) raised concerns about Visa and Mastercard fees, citing a lack of evidence that rising fees have resulted in improved services for retailers.
The EU’s current probe could be financially significant for Visa and Mastercard, should anti-competitive practices be identified. If found at fault, the companies could face fines of up to 10% of their global revenue. Historically, such EU antitrust investigations can be lengthy, often spanning months or years before conclusions are reached.
As regulators continue to gather evidence, retailers await potential shifts in the fee landscape that could impact operations. With fees remaining a focal point, the investigation highlights ongoing tensions between payment giants and Europe’s retail sector over cost transparency and fair competition.
