Visa and Mastercard are charging retailers excessive fees, which the credit card companies raise unilaterally. As a result, they are hindering competition and innovation in the European payments market, according to several trade associations in a letter to the European Commission.
Visa and Mastercard process roughly two-thirds of card payments in the eurozone. Retailers complain about the lack of transparency and the yearly increases in fees, without a clear explanation of what these costs cover. They cite a study showing that fees rose by 34 percent in four years, excluding inflation – an average of 7.6 percent per year.
Concerns from major online retailers
The letter, seen by Reuters, was signed by Ecommerce Europe, EuroCommerce, Independent Retail Europe, the European Association of Corporate Treasurers, and the European Digital Payments Industry Alliance. Together, these groups represent nearly all major online retailers that are active across the continent.
They are calling on the European Commission to take action against Visa and Mastercard under existing EU competition rules. They also urge the EU executive to impose price controls and transparency obligations on International Card Schemes (ICS).
‘They have been able to increase their fees without competitive challenge or regulatory scrutiny.’
The letter adds: “International Card Schemes have also rendered their system of fees and rules so complex and opaque that players are unable to understand, let alone challenge, what they are paying for and why.”
‘Extremely high levels of security’
Visa told Reuters that its fees reflect the value of its services to financial institutions, merchants and consumers in Europe, including “extremely high levels of security and fraud prevention, near-perfect operational resilience and reliability, and a wide range of consumer protections and high-quality, innovative products and services”. Mastercard did not respond to a request for comment.
Digital euro
Through the digital euro, the European Union aims to counterbalance the dominance of American payment providers. However, the legislative process behind it is progressing too slowly for many retailers and policymakers.
