EU executive drops case against MasterCard fees

The European Union's executive arm dropped its case against MasterCard transaction fees on today, ending a battle that helped sow confusion among banks building a new pan-EU payments system.

The European Commission ruled in December 2007 that the U.S. company's multilateral interchange fee (MIF) levied on retailers breached EU antitrust rules and must be changed within six months.

MasterCard rejected the ruling and appealed to the European Court of Justice in a case that has yet to be concluded.

EU Competition Commissioner Neelie Kroes said on Wednesday she saw no need to pursue MasterCard further due to its undertakings to cut MIF transaction fees to 0.2-0.3%.

"We will be monitoring implementation closely in coming months," Kroes said in a statement. A probe into rival Visa Europe's fee structure continues, she said.

The EU is introducing a single euro payments area (SEPA) so that consumers can make credit and debit payments anywhere in the 27-nation bloc in euros from a single bank account.

But confusion over the legality of MIF left banks unsure about the business model to use for launching rival cross-border payment card schemes, threatening SEPA's rollout.