EU antitrust regulators are scrutinising Visa and Mastercard’s Scheme Fee structures as they investigate whether these charges pose an undue burden on European retailers.
EC opens new Scheme Fee investigation
With a detailed set of questionnaires distributed to retailers and payment service providers, the European Commission’s goal is to assess if the fees imposed by the two payment giants are fair or stifle competition within the European Economic Area (EEA), which includes the 27 EU member states, Iceland, Liechtenstein and Norway.
Scheme Fees
At the heart of the inquiry are “Scheme Fees,” which Visa and Mastercard mandate for businesses within their payment ecosystems.
These fees cover the essential processes of payment authorisation, clearing and settlement.
However, their costs and justifications have come under criticism for a lack of transparency, particularly as retailers report substantial hikes since 2016.
These increases have effectively neutralised the potential savings intended by the EU’s 2015 Interchange Fee Regulation, which capped transaction fees to alleviate the financial strain on merchants.
According to EuroCommerce – a trade group representing large European retailers – the fees are costing the EU economy approximately €1.5 billion annually.
Investigation Doesn’t Stop at Scheme Fees
EU regulators are also evaluating processing fees, which payment operators levy to facilitate transactions, and “behavioural” or “compliance” fees, which are charged for rule enforcement.
To get a full picture, the Commission is asking retailers if they can negotiate any of these fees with Visa and Mastercard and if new fees have been introduced without their input.
A crucial part of this assessment is understanding whether merchants are properly informed about these charges and if the justifications provided align with the value the fees claim to offer.
Visa and Mastercard have responded to the EU’s requests for information.
A Visa spokesperson confirmed the receipt of the Commission’s queries, noting that the company is currently compiling the necessary data.
Mastercard, in turn, acknowledged the request as part of broader regulatory efforts to maintain visibility over industry practices.
Both companies continue to dominate the payment card sector, a position that has fuelled years of complaints from retailers over opaque pricing models.
The EU’s inquiry aligns with broader global concerns over payment processing fees.
In May, the UK’s Payment Systems Regulator (PSR) voiced similar concerns about Visa and Mastercard fees, questioning if the increased fees are yielding meaningful service improvements for retailers.
As cross-border commerce expands, the rising cost of card payment processing has implications for businesses worldwide.
With no immediate answer to this issue, European retailers are keenly awaiting the EU’s conclusions on whether Visa and Mastercard’s fee structures limit competition and transparency.
Should the investigation identify anti-competitive practices, Visa and Mastercard could face penalties amounting to 10% of their global revenues, a significant financial consequence.
Antitrust investigations by the EU are often lengthy, and the conclusions can take years to materialise.
However, the potential for fines could encourage Visa and Mastercard to revisit their fee structures sooner, potentially bringing about much-needed transparency and reducing costs for Europe’s retailers.
As the investigation unfolds, European retailers and payment providers are hopeful that any regulatory action will lead to a more balanced fee landscape, fostering fair competition and improved transparency in a market largely dominated by two payment giants.
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