Italy Slaps MasterCard, Banks With Hefty Fines
Last week, Italy’s competition enforcement agency, the Antitrust Authority, levied penalties against MasterCard and several Italian banks totaling more than $8.4 million for artificially raising interchange fees and passing those increases onto merchants and customers. Interchange fees are fees paid by merchants to the banks that issue the debit or credit card to their customers (the “issuing” banks).
After a 15-month investigation, the Antitrust Authority accused MasterCard and several issuing banks of using licensing agreements to raise and keep interchange fees high. In addition, the merchant banks entered into agreements that prevented them from comparing MasterCard’s fees to those of other credit cards. During this time, Visa’s interchange fee was 30% below MasterCard’s fee.
In addition to fines, MasterCard’s issuing banks will now have to provide a financial justification for their interchange fees, and the issuing banks might have to renegotiate their merchant contracts.
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