
EU fines Mastercard more than half a billion euros - denzil_correa
https://www.dw.com/en/eu-fines-mastercard-more-than-half-a-billion-euros/a-47179421
======
dijit
The card payment industry duopoly (in europe at least) is a really weird one
that seems to go mostly unnoticed.

I often wonder how much goes into the pockets of these companies who are
essentially providing an easily replaceable service if it were not for the
entrenched reality. (IE; to compete you'd need an entirely new card system
that would be incompatible with the others, and thus your card would be
unusable in most places)

That said, I can't complain too much about VISA; which (Apple Pay and Samsung
Pay also uses on the backend, there is no escape in Europe) -- they seem to be
processing things fairly well, even if I don't understand how much both
parties paying for such a service.

~~~
Fre_d
Here in Denmark, the story is a bit different. Many consumers here use a
Dankort, which is a national debit card. The fees are low and regulated by the
government. It is usually combined with a Visa so that it can be used abroad
as well.

~~~
krn
And in Germany it's Girocard[1]. You couldn't even buy a metro ticket with a
Visa / MasterCard in Berlin a few years ago. And maybe you still can't.

[1]
[https://en.wikipedia.org/wiki/Girocard](https://en.wikipedia.org/wiki/Girocard)

~~~
smsm42
I was astonished when I was in Berlin couple of years ago how many places
wouldn't accept credit cards. I was used to the US where I could get around
for months without carrying any cash, and there everybody was refusing to deal
with CCs. And I arrived on week-end, means I couldn't just go to a bank to
change cash (there were probably still places to do it, but I didn't know
where they were...). Had to borrow cash from local friends to get by until the
workweek started. No idea why Berlin is so reluctant to deal with credit
cards.

~~~
mafuy
I can answer this :) Because in Germany, everyone uses Girocard. It has a
lower fee, so it is preferred over credit cards. We also don't need the
consumer protections that credit cards offer because most of them are law
here.

~~~
smsm42
But if you already accept Girocard marginal cost of accepting Visa/MC (with
which they are co-branded frequently, as I understand) should be extremely
low. But what I encountered is a lot of cash-only places, from fast food &
restaurants to museums. In US, where I live, I know maybe one or two cash-only
restaurant out of a thousand. In Berlin, it felt like the majority is. And the
delta in fees can't be that big...

------
randomacct3847
I have to say the best thing about credit cards in the U.S. is the massive
point bonuses you get for signing up for cards. I have gamed the credit card
bonus system for ~6 years and pay for 90%+ of my personal travel including
international business and first class flights and high end hotels with points
earned from opening multiple cards each year with almost no impact to my
credit score (760+). Combined with the fact that points are not taxable it is
probably the single most lucrative “side hustle” I have that requires almost
no work.

~~~
ceejayoz
All those bonuses are coming from somewhere, though. In this case, it mostly
comes from higher fees on merchants, which leads to higher prices.

You're getting some points, sure, but everything you buy is a percent or two
higher to pay for it.

~~~
0xffff2
Everything _everyone_ buys is a percent or two higher. This behavior should
really be considered antisocial. GP is taking advantage of the system for
their own personal (moderate) gain to the (very small) detriment of everyone
else.

~~~
megaman8
The problem isn't the consumer who takes advantage of the system. the problem
is the regulations that prevent consumers from choosing whether they want to
pay that extra 2-3% that credit card companies charge the merchant. Right now,
if i want to pay with cash, I still end up paying that extra 2-3%, even if the
merchant wants to give me a 2-3% discount, they're not allowed, due to those
regulations.

~~~
Domenic_S
It's payment network agreements, not regulations in the government sense. E.G.
If you accept Visa, you cannot mark up credit transactions & discount for cash
per your agreement with them. It's nuanced (gas stations do it compliantly by
advertising both prices next to each other).

More info: [https://www.pymnts.com/visa/2018/non-compliant-cash-
discount...](https://www.pymnts.com/visa/2018/non-compliant-cash-discount-
card-fees/)

~~~
zAy0LfpBZLC8mAC
But that is a sign of a lack of regulation, as that is obviously
anticompetetive behavior (demanding that a competing product cannot be sold
cheaper).

~~~
Domenic_S
It's the same product being sold, not a competing product. And as a merchant,
you aren't required by any law to accept Visa, or credit cards of any kind.
Many merchants don't accept Amex, for example, because their fees are a few
points higher than competing networks.

~~~
zAy0LfpBZLC8mAC
Cash and Mastercard are competing products, and Mastercard requiring the
merchant to sell payment with cash at the same price as payment with
Mastercard is obviously anti-competetive. Whether the merchant has the choice
to not offer a particular product is irrelevant.

------
thefounder
Hopefully crypto payments/stablecoins will get more traction so we can get
ride of these mono/dupolies.

~~~
freedomben
This was my thought too. It amazes me that people don't see crypto currencies
as the answer here, and one that solves a number of other problems at the same
time.

~~~
thefounder
I believe the main reason is the association of bitcoin and its flaws(i.e
volatility) with crypto payments.

The payment processors don't seem very eager to support stable coins either as
it's harder for them to inflate the fees/conversion to fiat.

------
kodablah
> The fine would have been higher, but Brussels reduced the amount by 10
> percent to thank Mastercard for cooperating.

I am unable to find a link to the ruling in the article, does anyone have it?
Curious how this number was arrived at.

~~~
Someone
Press release: [http://europa.eu/rapid/press-
release_IP-19-582_en.htm](http://europa.eu/rapid/press-
release_IP-19-582_en.htm). It says:

 _”Mastercard cooperated with the Commission by acknowledging the facts and
the infringements of EU competition rules.

The Commission granted Mastercard a 10% fine reduction in return for this
cooperation. Further information on this type of cooperation can be found on
the Commission's Competition website”_

with a link to [https://europa.eu/!XC69Qb](https://europa.eu/!XC69Qb).

Basically, you get a fine reduction if you promise not to appeal to the fine.

~~~
repolfx
That seems problematic. It appears to be equivalent to financial punishment
for appealing a ruling. And in the EU competition law is enforced via the rule
of essentially one woman and her department - competition laws are so vague
that she effectively has the power to levy huge fines at will, unchecked by
anything _except_ the right to appeal, because she doesn't have to prove
anything in court to begin with.

If the Commission is now able to levy such massive fines _and_ lower them if
you promise not to appeal, in a binding way, then they can simply make
whatever sum they pull out of thin air 10% higher, give a 10% "reduction" for
cooperation, and that's effectively a second fine for appealing the first.

------
kuschku
It's sad that this duopoly is controlling so much of the market, especially
that merchants can't make customers pay the fees (in which case mastercard and
visa would quickly lose their market share).

Especially considering that many european countries such as Germany had (and
have) independent systems with often orders of magnitudes lower fees, faster
transaction times and more safety and security.

I'd rather see girocard become a monopoly on the european market than to see
this mastercard/visa monopoly continue.

~~~
koolba
> ... especially that merchants can't make customers pay the fees ...

Why not? Is that due to contract terms that prevent you from charging more for
card transactions vs other payment methods?

I vaguely remember clauses like that were recently thrown out in the USA. I’d
imagine the EU would be even more consumer friendly.

~~~
throwawaymath
Anecdotally, I see lots of small businesses in the US which explicitly charge
slightly more for credit card transactions.

This is extremely common at gas stations and coffee shops, for example.

~~~
tzs
Sometimes that is actually the business charging slightly less for cash
transactions rather than charging slightly more for credit card transactions.

What's the difference? If the business advertises both a cash price and a
credit card price, then there is effectively no difference I believe whether
you characterize it is a discount for cash or a surcharge for credit cards.

However, if you only advertise one price, then its a surcharge if that is the
cash price and you add extra for credit cards at the register. If the one
price is the credit card price, and you take off some for cash at the
register, then it is a cash discount.

Doing a cash discount was a common trick at gas stations to work around terms
in their contracts that said they would not have credit card surcharges. There
was a lawsuit against such contract terms by merchants who wanted to do a
surcharge, and in a settlement in 2013 Visa and Mastercard agreed to allow
them (with some restrictions, like no more than 4%, must be a sign disclosing
them at the point of sale, had to be included on the receipt, and had to apply
to all cards), reducing the need for such tricks in many areas.

There are some states that have laws prohibiting credit card surcharges, so
the cash discount trick may still be in use there. California, Colorado,
Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and
Texas. These have been challenged on Free Speech grounds. The Supreme Court
has said that they are (well, New York's version, but others are similar) is a
regulation of speech, but did not rule whether it was an unconstitutional
regulation (the lower courts had not reached that issue) [1]. I don't happen
to know what happened to that case after that.

[1]
[https://www.supremecourt.gov/opinions/16pdf/15-1391_g31i.pdf](https://www.supremecourt.gov/opinions/16pdf/15-1391_g31i.pdf)

------
wslh
I don't know the entry barrier details, but are governments working on
standards to put your own payment system based on a defined API and following
standard regulations?

------
briandear
> On this basis, the Commission concluded that Mastercard's rules prevented
> retailers from benefiting from lower fees and restricted competition between
> banks cross border, in breach of EU anti-trust rules

The following will be extremely unpopular here, however, it's a bit
interesting that the EU is, in the case of private businesses, interested in
preventing "restricted competition," however, when it comes to taxes, the EU
continually criticizes Ireland for low corporate taxes. Essentially the EU is
opposed to tax competition.

The EU parliament has accused Ireland of being a tax haven and damaging the
economies of its neighbors. While now, Mastercard is being accused of harming
the EU economy by preventing competition. Mastercard gets fined for preventing
competition (a correct decision in my opinion,) while strangely, Ireland also
gets condemned for attempting to have lower taxes. Ireland, Hungary, and
Bulgaria are promoting competition and they're in "trouble" while Mastercard
is restricting competition and they're in "trouble" with the EU as well.

So the EU Parliament is effectively acting like Mastercard by attempting to
prevent tax competition which would lower prices for consumers far more than
anything Mastercard could come up with. If the EU actually cared about
competition and lower prices for consumers, then they'd let members set tax
rates to whatever they want, but instead they want to "harmonize" tax rates --
essentially destroying the competitive advantage of lower tax locales. The
countries that are harmed the most by tax competition are the ones that have
highest taxes and public obligations -- yet Ireland, Hungary, and Bulgaria are
supposed to raise their taxes to compensate for the fiscal decisions of
France, Spain, or Italy?

"The EU’s tax commissioner Pierre Moscovici said in November that the
Commission was considering using extraordinary powers to strip EU states of
their veto power on tax matters to break resistance over blocked
legislation."[1]

So the EU tax commissioner wants to essentially force EU member states to
comply with a "harmonization" of tax rates, despite some members opposing such
a move and now the EU is fining Mastercard for attempting to "harmonize"
interchange fees? That's hypocrisy, assuming the reason for the EU fine is to
protect competition and/or lower prices for consumers. The difference is that
businesses can more easily stop accepting Mastercard than they can change
governments. It's worth noting that Pierre Moscovici is French and France has
some signifiant headwinds in terms of regulatory and taxation attractiveness
for companies. Punishing Ireland, Hungary, Bulgaria and other countries with
significantly lower taxes serves to benefit high tax countries such as France.

So good for the EU for punishing Mastercard -- let's hope that they now turn
to punish themselves for attempting to prevent competition with taxes. To be
clear, I'm not anti-tax, I'm anti-tax harmonization and the reason is that tax
harmonization essentially subsidizes bad fiscal policy. So countries like
Ireland lose a competitive advantage simply because Spain can't balance its
checkbook.

[1] [https://www.reuters.com/article/us-hungary-ireland-
taxation/...](https://www.reuters.com/article/us-hungary-ireland-
taxation/hungary-ireland-oppose-eu-wide-tax-harmonization-efforts-
idUSKBN1ET1ZY)

~~~
the_mitsuhiko
> The following will be extremely unpopular here, however, it's a bit
> interesting that the EU is, in the case of private businesses, interested in
> preventing "restricted competition," however, when it comes to taxes, the EU
> continually criticizes Ireland for low corporate taxes. Essentially the EU
> is opposed to tax competition.

How is that "interesting"? That should be obvious. Taxes pay public goods,
private companies just extract money to investors. They are diametrical
opposed.

------
xwvvvvwx
This is why we need crypto.

~~~
purerandomness
How would crypto-currencies change the situation?

~~~
xutopia
Decentralization.

~~~
purerandomness
The market has shown that cryptocurrency infrastructure tends to centralize in
the same way.

------
goalieca
Europe seems to be on a roll lately but is brexit going to change that? Is
GDPR and all these other consumer focused regulations lessened by losing that
market?

~~~
kuhhk
Why would Brexit affect the EU's GDPR legislation that already exists? Perhaps
it could change in Britain, but it would still exist in the EU, where the
legislation was approved and is currently being enforced.

~~~
M2Ys4U
The ICO won't be a member of the EDPB post-Brexit which will definitely have
an impact, but not a catastrophic one.

The bigger problem is that the UK won't be able to be certified as having
adequate protection due to the Snooper's Charter (or, rather, any adequacy
decision will be almost instantly sent for judicial review).

~~~
noir_lord
Yep.

I think our politicians have forgotten how much we got away with by doing it
after we joined.

------
chrismeller
> The Commission, which monitors competition, said that Mastercard's rules
> prior to 2015 forced retailers to pay certain bank fees in the country they
> are located rather than let them shop around.

Meanwhile I can’t get a debit card from my bank that defaults to a language I
speak at POS terminals because that’s not the official language of the country
I opened it in.

The logic and connection being that is the country in which I signed the terms
of service and agreed to x, y, and z (one of those being the language and
another being fees).

So I, as a consumer, am stuck with the terms of the country I reside in, but
the bank, as a merchant, shouldn’t be?

~~~
jhrmnn
That's a false analogy. No one forces you to stay with your bank. If you are
an EU citizen, you can open an account in any other EU country. Mastercard was
forcing merchants to only use banks within their respective countries.

~~~
chrismeller
In point of fact my bank is German, but because I’m in Estonia I’m regulated
(in their mind) by the Estonian TOS I signed.

~~~
jhrmnn
Which is necessary because each EU country still has its own local laws, which
the local T&C must abide. If you travelled to Germany and opened a bank
account at a local branch, you’d get German T&C.

------
pixelpp
The EU laying down the law!

