MA MasterCard Incorporated

By Allison Prang 

European Union regulators said Tuesday that Mastercard Inc. and Visa Inc. have agreed to lower the fees assessed to merchants when they accept debit or credit cards issued outside the region, a move that comes after merchants alleged that networks and banks colluded to inflate those fees.

The European Commission said both companies made offers to lower these fees -- known as interregional interchange fees -- by a minimum of 40%. The commission, which has asked for feedback on those proposals, said the fees are applied to payments made in the EU and three other European countries with cards issued outside of the region.

The commission is worried that the fees could raise prices for companies in Europe, potentially driving up prices for consumer goods and services.

Under the proposals, interregional interchange fees would be 0.2% of the transaction value for debit cards and 0.3% for credit cards when carried out in person. Fees for online purchases would be lowered to 1.15% for debit cards and 1.5% for credit cards.

The European Commission plans to test these proposals in the market before they become permanent, and the new rates would go into effect six months after that decision is made. The commitments would be effective for 5 1/2 years.

Mastercard said Tuesday in a securities filing that it took the action to avoid prolonged litigation. It expects to record a roughly $650 million charge in the fourth quarter in connection with the matter.

Mastercard said it isn't admitting that its practices violated EU competition rules.

Visa didn't immediately provide a comment on the matter.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

December 04, 2018 08:48 ET (13:48 GMT)

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