Visa and Mastercard have reached a deal with the European Commission to cut inter-regional interchange currency fees. This is the latest concession from the two credit card networks in a long-running antitrust battle with the European Union.
Retailers will be charged about 40% less on purchases made in the European Economic Area using Mastercard, Maestro, Visa, Visa Electron and V-PAY credit and debit cards issued in countries outside the EEA.
“Mastercard and Visa have committed to significantly reduce the interchange fees applied to payments made in Europe with cards issued elsewhere,” said commissioner Margrethe Vestager, in charge of competition policy, in a statement posted by Yahoo Finance.
“The commitments, which are now binding on Visa and Mastercard, will reduce the costs borne by retailers for accepting payments with cards issued outside the EEA. This, together with our January 2019 decision on Mastercard’s cross-border card payment services, will lead to lower prices for European retailers to do business, ultimately to the benefit of all consumers.”
When a person uses their debit or credit card in a shop or online, the retailer’s bank pays a fee called “multilateral interchange fee” to the cardholder’s bank. Naturally, the retailer’s bank passes on the fee to the retailer and they then pass on that cost to the end consumer.
Theoretically this should make prices go down in Europe, for all consumers. But that’s only if retailers pass on these savings to consumers. One other positive side could be that more retailers will start accepting credit cards. Visa and Mastercard have also reached a $6B settlement in the United States over interchange fees.