EU Probes Visa and Mastercard Over Impact of Payment Fees on Retailers

The European Commission has initiated a probe into whether Visa and Mastercard’s fee structures are unfairly impacting retailers. According to an EU document seen by Reuters, the Commission, which enforces competition regulations across the EU, is examining fees levied by the two card giants, focusing on their potential impact on businesses within the European Economic Area (EEA).

The investigation began with questionnaires distributed to retailers and payment service providers in September, with responses required by October. The inquiries center on various fees, including scheme fees charged for participating in the card payment network, as well as their frequency and transparency. Retailers have long expressed concerns about these fees, arguing that they have risen consistently in recent years and have become increasingly opaque, per Reuters.

Visa and Mastercard, which dominate the global payment card market, have faced scrutiny for years over their business practices. The EU’s questionnaires, which Reuters reports are often used to build potential antitrust cases, ask whether the introduction of new fees, removal of existing ones, or the cumulative number of charges within the EEA since 2016 have hindered retailers’ business operations. If regulators decide to proceed with an antitrust case based on their findings, it could result in fines of up to 10% of a company’s global revenue.

When approached by Reuters, an EU spokesperson stated that they would not provide further comments on the ongoing investigation. However, Visa confirmed that it had received an information request from the Commission in August and is currently compiling the necessary documentation. Mastercard similarly responded that it views the Commission’s request as a standard regulatory inquiry, aimed at increasing understanding of the payment industry’s structure.

The Commission’s probe is likely in response to growing frustrations from retailers who argue that fees have erased gains made through the 2015 Interchange Fee Regulation, which aimed to cap charges on credit and debit card transactions. EuroCommerce, a major retail lobbying group with members such as Amazon, IKEA and Carrefour, noted that while interchange fees were reduced by the regulation, these reductions have been offset by new or increased scheme fees. EuroCommerce estimates that the cumulative cost to the EU economy is approximately 1.5 billion euros annually due to these fees.

EuroCommerce voiced additional concerns, emphasizing that the complexity of over 800 distinct scheme fees has led to confusion among both acquirers, who process payments on behalf of retailers, and merchants, who often struggle to understand the fees’ value or underlying cost basis. The group indicated that this complexity has, in effect, nullified the intended benefits of the interchange fee cap introduced in 2015.

Additionally, Britain’s Payment Systems Regulator recently echoed these concerns in May, pointing out that there is scant evidence that the steep rise in fees has improved service quality for merchants. The UK regulator’s remarks underscore a broader international scrutiny of the payment card industry and its fee structures.

Questions posed by EU regulators also seek to uncover whether retailers are given a say in the introduction or adjustment of fees and whether they are allowed to negotiate the fees charged by Visa and Mastercard, including scheme, processing, and innovation fees. Processing fees, another source of contention, are applied by card networks for services such as transaction authorization, clearing, and settlement. Retailers have raised concerns that these fees, and potential penalties levied by Visa and Mastercard, lack transparency and sufficient justification.