In an effort to prevent the European Commission from permanently banning multilateral interchange fees or MIFs, MasterCard has brought its case to Europe’s highest court. A hearing with the European Court of Justice is scheduled for July 4th.
The hearing represents the potential end of a long and arduous legal battle between MasterCard and European regulatory authorities. In 2007, the commission decided interchange fees for payment cards issued in Europe were a direct violation of the European Union’s rules on fair competition. MasterCard tried to legally overturn the ban, but a lower European court upheld the commission’s ruling in May 2012.
Though the July 4th hearing is just the first interaction with the European Court of Justice, there is no date set for a ruling, thus any decision could take months or even more than a year. Should the Court rule against MasterCard, following the likely appeal, the global card network will have exhausted every route possible to overturning the ban, which would go into full effect.
In an attempt to appease regulators, both card networks have decreased their interchange fees with MasterCard decreasing their fees in 2007 and Visa announcing fee changes last month. To add insult to injury, the commission announced in a separate case launched in April that it would investigate card fees charged to foreign tourists in Europe, saying these fees have a negative economic impact.
Any ruling has implications that extend beyond MasterCard and will impact Visa Europe and the broader financial and payment industries as well. Furthermore, the decision by the European Court of Justice could serve as precedent for other countries to potentially remove the interchange fees charged by the major international card networks.
