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The European Commission is expected to tell MasterCard Inc. (MA) Wednesday that the fees it charges stores for international credit …
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According to Thompson Financial News (Dec 14) [click here to read article], next week the European Commission will rule that MasterCard’s charges are illegal and violated the law. According to the report, “[t]he commission has longed feared that interchange fees, set at around 1 per cent per purchase, paid by retailers’ banks to card-issuing banks, are being abused to collect the highest rate of return.” Interchange rates for the identical services in the U.S. are nearly double the charges in Europe.
[Source, via Thompson Financial]
According to Reuters, the expected EU proposals for interchange fees has been delayed. It was to be released any day, but will now occur within the next few weeks, or perhaps not until next year. We hope this was not caused by Visa’s planned IPO. Could you imagine if the offering took place prior to this important ruling – investors would be denied the opportunity to fully understand its impact. From our U.S. prospective, can you imagine the anguish from European merchants and consumers who are forced to pay upwards of 1.0% in merchant fees? Then again, the rates in the U.S. are 70% higher than that, which raises the reoccurring question of why have the member banks and card associations been able to (as we assert) illegally fix prices and artificially charge such sky-high rates?
[Commentary: WayTooHigh.com, via Reuters report]