The European Commission has just levied a behemoth fine against the global payments firm Mastercard. The charge? Breaking European Union antitrust rules – something credit card companies are infamous for doing.
European Commission slams Mastercard with a €570.6 million fine
Specifically, the European Commission found that Mastercard was overcharging customers, as well as conspiring against merchants. This is especially notable seeing as Mastercard is the second largest credit card company within the European Economic Area (EEA).
According to the European Commission’s report, Mastercard was found to be obliging other banks to apply so-called interchange fees of the country where a particular retailer happened to be located.
As a result, merchants found it dramatically harder to explore and use other credit cards than Mastercard, that might have otherwise had more relaxed transaction fees.
Nevertheless, it would appear that the European Union is not taking such a breach of consumer trust and choice lightly. The European Commission has now hit Mastercard with a colossal fine of $650 million (€570.6 million).
However, this fine – which already reaches over half a billion euro – could have been even more substantial. The European Commission has noted that Mastercard’s fine has already been reduced by 10%, due to the payment giant’s cooperation during the investigation.
This incident highlights how easily profit-driven payment giants can bend the rules
Moreover, the European Commission came to the conclusion that without these restrictive Mastercard rules, customers could have benefited from lower bank rates, in countries with lower interchange fees.
Cryptocurrency supporters might be the first to argue that this showcases exactly why the world is in dire need of a decentralized payments system. The usage of credit cards is nearly ubiquitous in developed countries. As such, credit card companies hold a vast amount of power.
Furthermore, this latest incident seems to highlight how easy it can be for profit-driven payment giants to bend the rules in their favor. Although Mastercard is now facing a substantial fine, consumers and retailers were ultimately the ones who footed the bill for Mastercard’s fraudulent practices.
It would appear that this is something that European Commissioner Margrethe Vestager agrees with. ”European consumers use payment cards every day, when they buy food or clothes or make purchases online,” Vestager noted.
”By preventing merchants from shopping around for better conditions offered by banks in other Member States, Mastercard’s rulers artificially raised the cost of card payments, harming consumers and retailers in the EU,” she continued.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.