Boston, MA 09/12/2014 (wallstreetpr) – MasterCard Inc (NYSE:MA) suffered a blow in Europe’s top court over the interchange card fees. The ruling may also have a bearing in other competition cases facing the company in other European countries. The company said that the adverse ruling would not impact their operations negatively. However, they think consumers would be charged more by the banks to cover the lost interchange fees.
MasterCard Inc (NYSE:MA) had little to celebrate from the ruling by the top EU court based in Luxembourg. Even investors didn’t like the development and sent shares of Mastercard down the drain on Thursday. The court found the card company in violation of competition rules because its interchange fees give it an undue edge against rivals.
Rivals celebrate ruling
The interchange fees allow the cardholder’s bank to charge a fee to the retailer’s bank when the card is used to make a purchase in a cross-border transaction. The court agreed with the European Commission’s view back in 2007 that allowing banks to charge higher interchange fees positioned Mastercard as a preferred card partner while hurting the consumers and its rivals. That explains why Mastercard Inc (NYSE:MA)’s smaller rivals in Europe celebrated the ruling.
The president of Mastercard Inc (NYSE:MA) Europe, Javier Perez, termed the European Court ruling as “disappointing”. However, he said that they expect almost no impact from the interchange fees ruling because they have been operating in compliance with the earlier commission’s decision on the matter.
Even though Mastercard claims to have already adjusted to accommodate the negative ruling, the decision of the top court could have a bearing on the other cases that the card company is facing in other European countries including the U.K., Italy, Hungary and France. The company is facing competition investigations in those places and court rulings there were placed on hold ahead of the top court’s decision.
Interchange fees capping
Following the growing outcry and criticism against card companies, the EU is preparing to cap interchange fees. As such, Mastercard Inc (NYSE:MA) and other card companies would have to comply with interchange fees of 0.3% charged on the value of a credit-card transaction and 0.2% charged on the value of debit-card transaction.
