Categories Finance, Technology, U.S. Markets News

Mastercard fined $648 million in EU for anti-competitive practices

The business practices of American credit card companies have been under strict scrutiny in the European Union for a long time. Less than a month after the busy holiday season ended, regulators took action against Mastercard (MA) this week for its controversial rules related to the collection of interchange fees, which had quite often left investors speculating about the stock’s movement.

The action comes about two weeks after Mastercard ditched its name from the iconic logo featuring interlocking circles, giving the brand a whole new look. The move was part of the company’s efforts to rebrand itself as a leading payments technology company.

The competition regulator in EU found the payment services giant guilty of artificially hiking the cost of doing transactions in Europe. According to the European Commission, Mastercard’s anti-competitive rules, which were in effect before 2015, caused inconvenience to retailers and consumers by denying them access to cheaper card payment services in the region.

The competition regulator found the payment services giant guilty of artificially hiking the cost of doing credit card transactions in Europe

By forcing partner banks to pay retailers fees applicable in the countries where they are based, rather than the country where the transaction is done, Mastercard allegedly divided the region, which has otherwise been a single market. The company seems to have tried to cash in on its extensive reach to the European market.

Since the company has withdrawn the controversial rules after the introduction of the Interchange Fee Regulation a few years ago, it need not have to review the current practices in the wake of the penalty. Meanwhile, the regulators reduced the fine by about 10% considering the cooperation extended by Mastercard’s management in the various stages of the investigation since it was launched in 2013.

Mastercard, Visa slip after decision to cut controversial fees in EU

Separate cases are pending against Mastercard and Visa in Europe for inappropriately charging foreign travelers who use their services there. However, the card companies are expected to escape fine in those cases, thanks to the reciprocal measures adopted by them.

Shares of Mastercard suffered in early trading Tuesday after the market reacted negatively to the EU penalty. After registering a 19% gain in the past twelve months, the stock had closed the previous session up 1.35%.  Visa shares also opened Tuesday’s session lower.

 

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference, and much more!

Most Popular

CVX Earnings: Chevron reports lower revenue and profit for Q3 2024

Energy exploration company Chevron Corporation (NYSE: CVX) on Friday announced third-quarter 2024 financial results, reporting a decline in net profit and revenues. Net income attributable to Chevron Corporation dropped to

Key highlights from Exxon Mobil Corporation’s (XOM) Q3 2024 earnings results

Exxon Mobil Corporation (NYSE: XOM) reported its third quarter 2024 earnings results today. Total revenues and other income remained relatively flat at $90 billion compared to the same period a

AAPL Earnings: Apple Q4 2024 sales rise 6% YoY, beat estimates

Apple Inc. (NASDAQ: AAPL) reported an increase in revenues for the fourth quarter of 2024. The top line came in above estimates. The gadget giant generated revenues of $94.9 billion

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top