EU Faces Battle Over Visa and Mastercard Card Fees Amid Retailer Backlash

Visa and Mastercard, two titans of the global payment card industry, are under intense scrutiny in Europe as a coalition of major retailers and industry associations formally request intervention from the European Commission. The heart of the issue lies in soaring transaction fees and the persistent lack of transparency surrounding those charges—factors that, according to the retailers, are eroding competitiveness across the European Union and inflating operating costs at a critical time for both brick-and-mortar and digital commerce.

Mounting Discontent: The Retailer Perspective​

The coalition represents an impressive roster that includes familiar retail giants such as Aldi, Amazon, Carrefour, H&M, IKEA, and eBay. These organizations, joined by leading trade associations, claim that Visa and Mastercard have leveraged their dominant market positions—handling roughly two-thirds of all euro zone card transactions—to increase fees unchecked and maintain complicated, opaque pricing structures. With interchange and scheme fees rising 33.9% between 2018 and 2022, according to an independent report by Brattle Group, the discontent has escalated into a formal antitrust complaint.
In a letter, fragments of which were obtained by Reuters, addressed to EU antitrust chief Teresa Ribera, financial services commissioner Maria Luís Albuquerque, and economy chief Valdis Dombrovskis, the retailers argued:

“International Card Schemes have been able to increase their fees without competitive challenge or regulatory scrutiny. They have also rendered their system of fees and rules so complex and opaque that players are unable to understand, let alone challenge, what they are paying for and why.”

A Climate of Rising Costs​

The timing of the increases and the nature of the complaints are crucial. The COVID-19 pandemic accelerated the adoption of cashless payments, transforming the landscape of European retail; more transactions inevitably meant higher aggregate fees. For businesses operating on slim profit margins—like grocery discounters and fashion retailers—even small percentage increases in card fees translate into millions of euros in additional annual costs. The Brattle Group report notes a cumulative 33.9% rise in International Card Scheme (ICS) fees over four years, steeply outpacing both inflation and any tangible increases in service quality or consumer protection.

Visa and Mastercard’s Defense​

Visa and Mastercard have responded by defending their fee structures as commensurate with the level of security, fraud prevention, operational resilience, and consumer benefits they provide. According to company representatives, the fees support substantial investments in keeping payments systems reliable and secure, ensuring near-perfect uptime, and providing a broad array of protections to both merchants and cardholders.

“This includes extremely high levels of security and fraud prevention, near-perfect operational resilience and reliability, and a wide range of consumer protections and high-quality, innovative products and services that serve consumer and merchant needs,” a Visa spokesperson stated.

Yet, absent any clear breakdown of how specific fees correlate to platform improvements or additional features, critics claim the justification lacks transparency—echoing the central charge of the retailers’ complaint.

The Mechanics of Card Fees: A Primer​

For those less familiar with the intricacies of retail payment operations, Visa and Mastercard do not directly charge consumers for credit or debit card usage. Instead, merchants absorb a complex combination of “interchange fees” (paid to the cardholder’s bank), “scheme fees” (paid to the card network for facilitating the transaction), and additional processing charges.
The European Union had previously intervened in 2015, capping multilateral interchange fees on consumer debit and credit cards for cross-border transactions within the European Economic Area (EEA) at 0.2% and 0.3% of the transaction value, respectively. That intervention was heralded as a success by merchant groups, yet non-interchange fees—such as assessments, network fees, and other scheme-related charges—have since increased in both scope and complexity.
The Brattle Group’s findings, based on comprehensive data from major European retailers, suggest that these other fees—not subject to the original caps—are now the primary pressure points in the cost structure.

The Transparency Paradox​

One of the most persistent criticisms from the retail sector, and a focal point of their complaint to the Commission, is the deliberate complexity and opacity of ICS fees. Retailers claim that the fee system is so byzantine that even global enterprises struggle to accurately determine what they are being charged, let alone why certain charges increase.
The combination of undisclosed or difficult-to-understand “scheme fees” and numerous rules governing cross-border transactions, refunds, chargebacks, and compliance requirements leaves many businesses feeling at a disadvantage. The lack of accessible, itemized documentation has hindered retailers’ ability to challenge the fees or negotiate more favorable terms.

A European Competitiveness Issue​

The implications of unchecked card fees are broader than operating margins. The coalition of retailers and their supporters argue that high and unpredictable fees undermine the EU’s goal of promoting cross-border commerce and a single digital market. When card fees are inconsistent, or increase unpredictably from one jurisdiction to another, expansion becomes riskier, and pricing clarity suffers—for both businesses and consumers.
Additionally, smaller merchants and new entrants, who lack the negotiating power or in-house expertise to dissect complex fee schedules, face disproportionately high hurdles. These challenges can stifle innovation and entrench the dominance of incumbent retail giants, ironically running counter to the EU’s aims of fostering a more competitive marketplace.

Calls for Regulatory Reform​

The retailer coalition is urging the European Commission not only to investigate the current practices but to introduce new regulatory measures. Their wish list includes:

• Stricter fee regulation or caps, targeting both interchange and scheme fees
• Mandated transparency and itemization of all card scheme charges
• Regulatory scrutiny of fee adjustments, with requirements for clear justification tied to service improvements
• Additional antitrust tools to address dominance and potential anti-competitive conduct by global card networks

The precedent for intervention is well-established: regulators in both Europe and North America have imposed caps on specific card fees and have at times required detailed disclosures to promote transparency and fair competition.

Visa and Mastercard's Previous Commitments​

It should be noted, as referenced in the coalition's letter, that Visa and Mastercard had previously agreed—under regulatory pressure—to reduce their multilateral interchange fees on card payments within the EEA, with average reductions of about 40%. However, critics allege these reductions have been offset by increases elsewhere in the fee structure, essentially nullifying the original intent of regulatory intervention.
Indeed, the dynamics resemble a game of regulatory whack-a-mole: as scrutiny clamps down on one class of charges, card schemes allegedly shift profit generation to another, less visible dimension of their business models.

Impact on European Consumers​

Although consumers may not be directly aware of the costs associated with card transactions, the effects can be significant and wide-reaching. When retailers face higher card fees, they often have little recourse but to pass the cost along in the form of higher prices, reduced promotional budgets, or limited acceptance of certain payment types.
For lower-income or rural populations, the risk is that businesses will restrict payment options or even add surcharges for card usage—increasing financial exclusion. While such surcharges are banned for many payment types under EU law, businesses may find subtler means of compensating for lost revenues, including minimum purchase requirements for card usage or the withdrawal of loyalty incentives.

Competitive Landscape: Are Alternatives Emerging?​

European policymakers have long sought to reduce dependence on a duopoly of global card networks. Initiatives like the European Payments Initiative (EPI) aim to create a pan-European payment solution to rival Visa and Mastercard, but progress has been halting and fragmented. New digital-only banks, buy-now-pay-later platforms, and instant-payment solutions are gaining traction with consumers but remain a fraction of the total transaction volume compared to traditional card networks.
Open Banking, propelled by the EU’s PSD2 directive, has unlocked new possibilities for account-to-account payments—potentially bypassing global card networks entirely. However, technical, regulatory, and adoption hurdles remain significant, and the convenience and near-universal acceptance of card payments continue to give Visa and Mastercard a durable advantage.

Risks and Repercussions​

While the case for regulatory intervention appears compelling from the retailer side, it’s essential to acknowledge the potential downsides and counterarguments.
Security and Investment: Visa and Mastercard argue that fee income underwrites sustained investment in security and fraud prevention—a critical consideration as payment fraud evolves in sophistication. Excessive fee caps or regulatory micromanagement could theoretically hamper the ability of card networks to invest aggressively in these areas, with downstream risks for both businesses and consumers.
Innovation: If regulations curb the profitability of card payments below sustainable levels, networks may pull back on developing new products or features (such as enhanced loyalty programs, tokenization, or next-generation fraud analytics). This could slow the pace of innovation in Europe relative to North America or Asia.
Jurisdictional Arbitrage: Arbitrary or overly restrictive fee regulation may push some actors to seek more favorable regulatory environments, or prompt the fracturing of payments infrastructure along national lines—counteracting the benefits of a single market.

The Role of Antitrust and Market Power​

Competition authorities have historically focused on obvious abuses of market power: exclusionary tactics, tying practices, and predatory pricing. The challenge in the current debate is that the relevant abuses—a lack of transparency, gradual fee increases, and complexity—are subtle and cumulative. Dissecting them may require sophisticated market analysis and forensic accounting, as well as greater coordination between national regulators and the European Commission.
The Commission’s willingness to take up these new challenges will likely determine the trajectory—not only for card fees in Europe but for the broader payments landscape.

Outlook: What Could Happen Next?​

• Formal Investigation: The Commission could launch a formal antitrust investigation. If abuses are found, remedies could range from fines to enforced restructuring of fee schedules or mandatory disclosures.
• New Regulatory Instruments: The Commission could propose direct regulatory caps on current category fees or require clear separation and disclosure of all card network charges.
• Market-Led Solutions: If policy intervention remains slow, expect momentum behind alternative payment systems, like EPI, to continue growing.
• Retailer Adaptation: Large merchants may invest further in private-label payment programs or seek to route payments via non-card instruments, leveraging Open Banking and instant payments.

Critical Analysis: Weighing the Evidence​

The evidence supporting retailer complaints appears robust. The Brattle Group report’s documentation of a 33.9% cumulative fee increase over four years, paired with the lack of corresponding service improvements, suggests the core allegations are credible. Multiple reputable press outlets, including Reuters, TechRadar, and direct statements from involved retailers, corroborate both the size of the fee increases and the dominance of Visa and Mastercard in Europe’s payments ecosystem.
Yet, there are genuine risks to overzealous regulation. Payments security is not a static target; it demands sustained investment and agility. The temptation to artificially suppress card network profitability must be balanced against the very real need for Europe to remain competitive, secure, and innovative in global digital markets.

Conclusion​

The demands of Europe’s leading retailers for action on card scheme fees represent not only industry frustration but a decisive test of the European Commission’s ability to foster fair, competitive, and consumer-friendly markets. The next chapter—whether regulatory, judicial, or market-led—will profoundly shape the European payments sector for years to come.
For European business owners and consumers alike, the stakes could not be higher. The outcome will determine how much merchants pay to accept card payments, how quickly innovation accelerates or stalls in the retail payments space, and ultimately, who bears the hidden costs of modern commerce. As merchants and policymakers alike seek clarity and fairness, only sustained scrutiny and balanced oversight can ensure equitable outcomes for all.

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Source: TechRadar Retailers demand European Commission investigate Visa and Mastercard fees