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MasterCard Cautions Consumers Not to Expect Lower Prices at Shops as a Result of EC Decision on Interchange Fees


asterCard Europe cautioned consumers today not to expect to see lower prices when they shop as a result of the European Commission decision on MasterCard’s intra-EEA cross-border interchange fees. Instead, if this decision were adopted across the EU, they will more likely see the benefits they have come to expect when they use their credit and debit cards fade away, as happened to consumers in Australia when the government there imposed regulations on what had been a successful free market.

The Commission and some merchant groups, who heralded the decision as a Christmas gift for consumers, turned a number of facts on their head in concluding that consumers would benefit from lower interchange fees.

First, interchange fees do not hurt consumers, as the Commission claimed, or cause consumers to pay twice for using their payment cards. In reality, interchange fees benefit consumers by fairly sharing the cost of an electronic payment system among the two key beneficiaries of that system – cardholders and merchants. By asking merchants to pay a fair price for the significant benefits they receive, interchange keeps costs low for cardholders.

On a typical credit card transaction of 50 Euros, a merchant pays about 50 cents. For a debit transaction, the cost is half that rate. In return, merchants receive enormous benefits – more sales, guaranteed payment, protection from theft and fraud, and highly satisfied customers. But now, if the Commission gets its way, those costs will be shifted to consumers.

Merchants say that MasterCard prohibits them from disclosing to customers how much they pay for accepting payment cards. They know this is untrue. Merchants are free to disclose merchant discount fees, interchange fees, or any other costs they incur. But they choose not to disclose these costs to consumers just as they choose not to disclose any other cost of doing business, or how much they “mark up” their merchandise.

Commissioner Kroes claims that Australia’s regulation of interchange should be viewed as a success for consumers. But only merchants benefited from those regulations. There’s indisputable evidence that five years after those regulations were imposed, Australian consumers have suffered. Today, Australian cardholders are paying almost AUS$1 billion more as a result of increased fees, such as a resurgence of annual fees, and decreased features and benefits, like airline mileage programs. There’s no evidence that merchants lowered prices to reflect the lower interchange payments – and there’s little reason European consumers should expect them to do so here.

About MasterCard Europe
MasterCard Europe is the entity responsible for managing MasterCard Worldwide business in Europe - for Europe. With headquarters in Waterloo, Belgium, MasterCard Europe works with 51 European countries organized administratively into three customer areas, incorporating the Single Euro Payments Area (SEPA), mature markets and the developing markets of Europe, stretching as far afield as the eastern border of Russia. Through its network of local offices, MasterCard Europe can understand and meet the diverse needs of customers in the very different types of markets throughout Europe, enabling people to do business in their own way in their own language.

About MasterCard Worldwide
MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to


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