MasterCard (MA) Faces Penalty Over High Interchange Fees
Zacks Investment Research | Sep 08, 2016 10:56PM ET
According to certain sources, credit card company MasterCard Incorporated (NYSE:MA) has once again been slapped with a fine of $18.72 billion related to the overcharging of interchange fees to consumers in the UK.
These charges follow a 2014 ruling by the Luxembourg-based European Court of Justice which upheld a 2007 European Commission decision on MasterCard's multilateral interchange fees on cross-border transactions. It was ruled that MasterCard had breached competition rules through the 1992–2007 period.
The company was already under EU scrutiny for charging exorbitant interchange fees on transactions made through MasterCard’s cards. The interchange or cross-border card fees were booked by the card-issuing bank and charged to merchants. EU policymakers consider this to be an unfair cost that unnecessarily inflated card pricing for retailers and consumers. These costs also encourage unhealthy competition between card players, according to legislators.
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