The European Union has filed antitrust charges against MasterCard. The EU believes that MasterCard is artificially increasing the cost of credit card payments. If successful, MasterCard could be forced to pay 10% of its global revenue in fines. More importantly, MasterCard may have to change the way it sets fees for merchants. Merchants regularly complain about high payment processing fees. But banks and anyone who enjoys credit card rewards benefit from the fees. Changes could have a big impact on consumers.
The merchant fees vary widely by country. According to research from the Wall Street Journal, the fees range from less than 0.2% in The Netherlands to 1.5% in Poland. Interchange tends to be even higher in the United States.
Interchange Fees Explained
Whenever you use a credit card to make a payment, the merchant pays an interchange fee. That fee goes to the credit card company. Imagine you spend $100 at a grocery store with a Citibank MasterCard. The grocery store would pay $1.50 of interchange to Citibank. In addition, the grocery store would pay an assessment to MasterCard, which would be only a few cents. MasterCard actually makes it money from the assessments, not the interchange.
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