MasterCard Files Appeal of European Commission Decision

MasterCard seeks to annul decision which would harm consumers and undermine European competitiveness and innovation

MasterCard Europe has applied to the European Court of First Instance to annul the European Commission’s decision on MasterCard Europe’s cross-border interchange fees, and said it believes it has strong grounds for its request. The December 19, 2007 decision requires the company, among other things, to repeal its intra-EEA fallback interchange fees by June 21.

The company reaffirmed its intention to comply with the Commission’s Order while the appeal proceeds, as well as its commitment to ensuring that its payments services remain competitive and continue to benefit its customers as well as the millions of European cardholders and merchants who rely on MasterCard and Maestro cards.

MasterCard said its concerns with the decision focus on:

* the Commission’s failure to recognize that four-party payment systems cannot operate without default settlement terms between banks that issue cards to consumers and those that acquire transactions for merchants, which requires the setting of an interchange fee;
* the Commission’s refusal to recognize the efficiencies that four-party payment systems create and the fairness of MasterCard’s interchange fees; and
* the Commission’s inaccurate conclusion that, despite MasterCard’s May 2006 IPO, MasterCard and its customers continue to be “an association of undertakings”, and its mischaracterization of MasterCard’s interchange fees as decisions of an association that restrict competition under EC Treaty rules.


“MasterCard firmly believes that market forces, not regulation, should drive key decisions such as the setting of interchange fees and retailers’ choices over which forms of payment to accept. If left unchallenged, and especially if followed by national regulators, the Commission’s decision would not only be bad news for consumers but a blow to the European payments industry,” commented Javier Perez, President of MasterCard Europe.

Perez continued: "From a business point of view, a payment system that does not allow for efficient recovery of costs is not sustainable in the long term, nor is it desirable because it limits the scope for innovation in payment services offered to consumers.

“The Single Euro(pean) Payments Area (SEPA) for payment cards, launched at the beginning of the year, will continue to require enormous investment and commitment by market players. It’s difficult to expect them to expand into new markets when regulation lowers the incentive to take those risks. In our view, the best way to proceed for the payments industry and SEPA is to follow the established European public policy principle of relying on competition to deliver what consumers want.”