The EU announced its ruling today that MasterCard has six months to cut its illegal fees before the EU starts putting on penalties of its own.
From the Washington Post:
"The European Union's executive European Commission said that for 15 years MasterCard's multilateral interchange fee (MIF) on cross-border payment card transactions using MasterCard and Maestro cards violated EU rules on fair competition."
But whats even more interesting is that the EU states that this fee hits not just credit card users but also regular consumers who use cash.
"Competition commissioner Neelie Kroes said: 'Multilateral interchange fee agreements such as MasterCard's inflate the cost of card acceptance by retailers. Consumers foot the bill, as they risk paying twice for payment cards: once through annual fees to their bank and a second time through inflated retail prices paid not only by card users but also by customers paying cash.'"
More after the jump.
While it is pretty much certain that MasterCard will attempt to appeal this ruling, this is major ruling for consumers against unfair fees that the credit card companies has been lobbing on us for years without most of our knowledge. I've heard about interchange fees before since I've done some work with Unfaircreditcardfees.com and have since been following the issue, but most people don't know their even paying them.
As I said before, the really interesting thing about what Kroes said above was that people who aren't even using credit cards are suffering because of their fees. These interchange fees that are charged to businesses cause retail prices to go up to make up the difference - and that hits everyone regardless of payment method. On top of that, people who do use cards are when everything is said and done paying fees twice for one purchase - once on their regular annual and interest fees, and the second time on the inflated price of the goods they purchase.
And it looks like MasterCard isn't alone in this. From Reuters:
"The European Commission's order for MasterCard to change the way it sets fees or face fines will act as a guide for its rival Visa Europe, the EU executive said on Wednesday. 'We will certainly be active and not wait,' EU Competition Commissioner Neelie Kroes told a news conference."
So it looks like we can expect some major opposition from the entire credit card industry coming up on this issue. The reason that I think we can expect major opposition on this issue is because I can't see any difference as to the interchange fees paid in Europe and those we pay here. If its unfair and illegal for people to be double charged in the EU shouldn't our own lawmakers be looking into this hear? Or are these American based companies better at lobbying here than abroad and therefore safe from reform?
I would hope that this ruling would spark some discussion in the US - I'm sure no one this time of year is in favor of being double charged by the credit card companies on all their holiday purchases. But maybe I'm wrong, maybe what's good for the goose is good for the gander unless it comes to billions of dollars in profits for the credit card companies in the US...