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Financial services

Banking & Payment systems

Competition enforcement in the payment card market

The e-payments case against the European Payments Council (EPC)

In September 2011, the Commission opened an antitrust investigation into the standardisation process for payments over the internet ('e-payments') undertaken by the European Payments Council (EPC). The Commission is examining in particular whether the standardisation process limits market entry or innovation, for example through the exclusion of new entrants and payment providers who are not controlled by a bank. If proven such behaviour could be in violation of EU antitrust rules that prohibit restrictive business practices. An opening of proceedings does not prejudge the outcome of the investigation but merely means that the Commission is investigating the case as a matter of priority. On 13.06.2013, the Commission has decided to close antitrust proceedings in case EPC Online payments but continues monitoring the online payments market.

Multilateral Interchange Fees (MIFs)

The Commission has conducted antitrust investigations in the payment card market, targeting in particular Multilateral Interchange Fees (MIFs). These are fees charged by a cardholder's bank (the 'issuing bank') to a merchant's bank (the 'acquiring bank') for each sales transaction made at a merchant outlet with a payment card. In payment schemes such as Visa and MasterCard, which are associations of banks, these fees are multilaterally agreed by member banks.

When a customer uses a payment card to buy from a merchant, the acquiring bank pays the merchant the sales price less a 'merchant service charge', the fee a merchant must pay to his bank for accepting the card as a means of payment. A large part of the merchant service charge is determined by the interchange fee. Merchants pass on their costs for accepting card payments to their customers by raising retail prices.

The MIF appears to be a decision of an association of undertakings that may have the object and the effect of restricting competition between acquiring banks. The MIF is an important part of the total cost for card acceptance and ultimately contributes to the prices of goods and services for final consumers. As demonstrated by the existence of payment schemes that function without a MIF, multilateral interchange fees are not indispensable for the viability of payment cards.

Even though MIFs appear – at least in the cases investigated by the Commission so far – to constitute a restriction of competition within the meaning of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), they may be eligible for an exemption under Article 101(3) of the Treaty if it can be shown that they have positive overall effects on innovation and efficiency and allow a fair share of these benefits to be passed on to consumers.

The MasterCard decision of 2007

In 2007, the Commission issued a decision against MasterCard MIFs applicable to cross-border payment card transactions with MasterCard and Maestro consumer debit and credit cards in the European Economic Area (EEA). The decision found that MasterCard MIFs violate Article 101 TFEU in that they restricted competition between acquiring banks and inflated the cost of card acceptance by retailers without leading to proven efficiencies under Article 101(3) TFEU. MasterCard was given six months to conform to the Commission's order to set its MIFs in compliance with the EU antitrust rules.

MasterCard appealed the decision before the General Court but pending the judgment, MasterCard undertook to reduce its cross-border MIFs to 0.30% of the transaction value for consumer credit cards and 0.20% of the transaction value for consumer debit cards.

The General Court's judgment, fully upholding the Commission's decision, was issued on 24 May

On 11 September 2014, the European Court of Justice (case C-382/12P) confirmed that MasterCard's inter-bank fees for cross-border payment transactions in the European Economic Area (EEA) restrict competition in the Internal Market, in breach of EU competition rules (see MEMO/14/528).

The VISA decision of 2010

Following the expiry of an exemption decision in December 2007 and the adoption of the MasterCard Decision the Commission opened an antitrust investigation against Visa Europe, Visa Inc. and Visa International Service Association. In line with the MasterCard decision of 2007 (see below), the Commission's preliminary view was that Visa MIFs harmed competition between merchants' banks, inflated merchants' costs for accepting payment cards and ultimately increased consumer prices. Unlike in the MasterCard case, the Statement of Objections issued by the Commission in April 2009 covered all the consumer MIFs directly set by Visa Europe, which apply not only to cross-border transactions but also to domestic transactions in a number of EEA countries. Further, the Commission raised concerns against Visa Inc. and Visa International Services Association as regards the potential application of the Inter-Regional MIF by default.

In response to the Commission's objections, Visa Europe committed to reduce the maximum weighted average MIF for consumer debit cards for cross-border transactions and national transactions in those EEA countries where it sets the MIF directly to 0.20%. The Commission is of the view that the MIF rate proposed by Visa Europe is consistent with the Merchant Indifference Test *. The proposed maximum weighted average MIF may be modified if reliable new information on the cost of cards compared to the cost of cash becomes available.

Similarly to MasterCard's undertakings in 2009, Visa's commitments also provide for a number of measures to increase transparency and competition in the payment cards markets, which are an important complement to the proposed MIF reduction.

Following a market test, the commitments were made binding on Visa Europe in December 2010 for four years by a decision under Article 9 of Regulation 1/2003.

The VISA decision of 2014

Following the 2010 Visa decision which addressed the Commission's objections in respect of MIF for consumer debit cards, in 2014 the Commission adopted a decision making binding additional commitments from Visa Europe. Under these commitments, Visa Europe agreed to reduce to 0.3% the maximum weighted average MIF for consumer credit cards for Intra-EEA transactions, national transactions in those EEA countries where Visa Europe sets consumer credit MIF rates directly and for transactions with merchants located in the EEA with Visa credit cards issued outside the EEA but within the Visa Europe territory.

In addition Visa Europe committed to apply the debit 0.2% cap to all MIFs set by Visa Europe for transactions with merchants located in the EEA with Visa debit cards issued outside the EEA but within the Visa Europe territory.

Furthermore, Visa Europe committed to additional transparency measures.

Following a market test, the commitments were made binding on Visa Europe in February 2014 for four years by a decision under Article 9 of Regulation 1/2003.

The Visa case is currently ongoing against Visa Inc. and Visa International Service Association regarding primarily the inter-regional MIFs. A supplementary statement of objections was sent to Visa in July 2012.

The MasterCard II proceedings

In April 2013 the Commission opened another investigation into MasterCard's inter- bank fees. The second investigation covers (i) inter-bank fees in relation to payments made by cardholders from non EEA countries – as opposed to fees for cross border transactions within the EEA that were already prohibited in 2007, (ii) all rules on 'cross-border acquiring' in the MasterCard system that limit the possibility for a merchant to benefit from better conditions offered by banks established elsewhere in the internal market and (iii) related business rules (see IP/13/314).

On 9 July 2015 a Statement of Objections was issued in MasterCard II (see IP/15/5323).

Payments sector: Competition enforcement in the EU

20.03.2012 - Information paper on competition enforcement in the payments sector

This overview of the work done by EU competition authorities in the payment sector has been drafted by the banking and payments subgroup of the European Competition Network (ECN). Many of the cases and inquiries of this study address issues also raised in the Green Paper (such as interchange fees, internet payments and withdrawals from ATMs.)

Study on merchants' costs of processing payments by card and by cash

The Commission has conducted a study to measure merchants' costs of processing payments by card and by cash. The results provide a basis for calculating a MIF benchmark under the Merchant Indifference Test. The MIT is a methodology developed in economic literature which was used by the Commission to assess the MIF rates applied by MasterCard through its undertakings and by Visa Europe following its Commitments. The fee that meets this test ensures that merchants do not pay higher charges than the value of the transactional benefits that card use generates for them. Merchants enjoy such transactional benefits if card payments reduce their cost relative to cash payments. (see more details on this methodology)

Precise and detailed data on the costs incurred by merchants when taking payments by card and by cash is needed to apply the MIT. The relevant costs are:

  • the payment instrument-specific equipment
  • labour and
  • service costs.

The Commission has been collecting such data through two surveys of large and smaller retailers in 10 EU Member States (Austria, Belgium, France, Germany, Italy, the Netherlands, Poland, Spain, Sweden, and the UK). Following public calls for tender (COMP/2012/003 and COMP/2012/004), the survey contracts were awarded to Deloitte Consulting.

On Wednesday 19 February 2014 DG Competition presented the preliminary results of the data collection carried out by Deloitte Consulting regarding merchants' costs of accepting cash and card payments.

Press release
Slides of the presentation

On Wednesday 18 March 2015 DG Competition presented the final results of the data collection. They support the approach taken by the European Commission in the antitrust settlement decisions by Visa Europe and MasterCard's unilateral undertakings.

For further information regarding the study, you may contact the European Commission by e-mail at COMP-D1-MAIL@ec.europa.eu