MasterCard under EU fire over payment card fees

MasterCard is under investigation by the European Union over the level of fees tourists to the EU are charged when using cards to make purchases, which the EU competition regulator said could hamper cross-border trade.

The EU watchdog said on Tuesday MasterCard's fees were a concern in view of the growing role of non-cash payments.

"Fees charged for payments made by cardholders from non-European countries can be quite high. Actually, these types of fees are generally much higher than those charged within Europe," Commission spokesman Antoine Colombani said.

The world's second-largest credit and debit card network after Visa has already been banned by EU antitrust regulators from charging cross-border card fees within Europe after a Commission ruling in 2007.

The latest investigation will also examine some of the company's other business practices in the EU which the regulator said could hinder e-commerce and cross-border trade.

MasterCard's premium cards, which levy higher fees than normal cards, would also come under scrutiny, Colombani said.

MasterCard, which could be fined up to $740 million or 10 percent of its 2012 revenue if found guilty, said it would cooperate with the Commission.

The European Consumer Organisation (BEUC) welcomed the regulatory action, saying inter-bank fees push up prices, hurting consumers whether they pay with cash or with a card.

"So in the end, all consumers are hit by a scheme which ultimately rewards the card company and issuing bank," BEUC Director General Monique Goyens said in a statement.

EU retail lobby EuroCommerce, whose 1997 complaint triggered the first regulatory investigation into MasterCard, also welcomed the Commission's action but said more could be done.

"Despite a Commission decision and a European Court judgment, card fees in many member states remain far too high," EuroCommerce Director General Christian Verschueren said in a statement.

Mastercard challenged the Commission's 2007 ruling, but did agree to cap debit card fees at 0.20 percent and credit card fees at 0.30 percent of purchases while waiting for Europe's top court to rule on its challenge.

EU regulators are also investigating Visa Europe, the European licensee of Visa Inc and Europe's largest card network, over its credit card fees.

The Commission said it planned to propose rules on card fees before the summer to ensure a level playing field.

(Editing by Ethan Bilby and Jane Merriman)