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EU fines MasterCard $648 million for preventing stores from getting better rates


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When a customer pays a retailer with a credit card, the store's bank pays a fee to the cardholder's bank. The retailer's bank then passes this fee on to the store, which increases costs for customers.

 

Prior to 2015, the level of these "interchange fees" varied widely across Europe, but Mastercard's rules at the time required banks receiving card payments to apply the fee set in their home country.

 

I feel like this broke my brain. So I use a MasterCard at the store, and the store's bank has to pay a fee to MasterCard (which ultimately gets passed on to me); MasterCard was demanding....What exactly? I understand the consequence (stores are stuck with a bank in their home country when banks elsewhere have better rates), but what the hell does 'apply the fee set in their home country' mean? Are these fees set by government regulators?

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10 minutes ago, Chris- said:

 

I feel like this broke my brain. So I use a MasterCard at the store, and the store's bank has to pay a fee to MasterCard (which ultimately gets passed on to me); MasterCard was demanding....What exactly? I understand the consequence (stores are stuck with a bank in their home country when banks elsewhere have better rates), but what the hell does 'apply the fee set in their home country mean'? Are these fees set by government regulators?

 

Someone correct me if I'm reading this wrong, but it sounds like Master Card was limiting which banks merchants could use to their home country. This is in spite of the EU supposedly being unified financially. It sounds like Master Card is allowing merchants to shop around the EU now, but they're being fined for prior infractions.

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