Mastercard has been slapped with a €570 million [$650 million] fine by the European Commission for violating a European Union [EU] cross-border payments law. The violation stems from the financial company charging artificial fees on their merchants, as indicated by an EC press release dated 22 January 2019.
This landmark antitrust ruling was announced after a series of investigations by the EU, which concluded that Mastercard charged varied interchange fees depending on the location of the retailer, a breach of the EU’s Single Market rules.
Margrethe Vestager, the commissioner overseeing the competition policy in the EU said that Mastercard violated the EU’s Single Market rules by increasing the cost of card payments through the varied interchange fees charged.
In the EC statement, she said:
“European consumers use payment cards every day, when they buy food or clothes or make purchases online. By preventing merchants from shopping around for better conditions offered by banks in other Member States, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.”
The investigation into this fee-manipulation began in 2013 when the EC opened a “formal antitrust investigation” against the company to find any violation of cross-border-payments’ laws. It should be noted that Mastercard complied with these investigations, which resulted in a 10 percent decrease in the fine to be paid.
Findings of the investigation revealed that Mastercard’s cross-border acquiring rules resulted in retailers paying more for bank services in order to receive card payments, a cost that would be shared with eventual customers.
Cross-border payment facilitation is a cornerstone of virtual currencies and cryptocurrency proponents are advocating the same in light of the Mastercard fine.
Anthony Pompliano, the founder and partner at Morgan Creek Digital stated, tweeted:
“The legacy financial players can only win if you lose — what a horrendous business model. Long Bitcoin, Short the Bankers!”
Calvin Ayre, the founder of Ayre group and Bitcoin SV [BSV] proponent tweeted:
“use Bitcoin BSV to handle payments online and skip the credit card company monopolies.”
Despite the controversy, Mastercard’s stocks did not take a massive tumble as they warned stakeholders, while the investigation was underway, regarding the EC fine in 2017 and also included the same in a 2018 quarter report.
Subscribe to AMBCrypto’s Newsletter