The European regulators have once again gone on to put pressure on Visa and Mastercard. This latest round of scrutiny has zeroed in on scheme fees, which are the charges that are levied on banks that help in card payments across all their networks.
The new questionnaire, which has been dispatched by the commission, looks forward to getting clarity on three major points. These include the degree of choice the retailers have when it comes to accepting Visa and MasterCard as a payment option, the transparency of these charges, and the value that is derived from fees that they pay. As per Bloomberg, although the investigation is still in its preliminary stage, it can very well result in certain formal proceedings along with penalties, which might reach up to almost 10% of the annual revenue of the company.
This new scrutiny happens to come at a time when Christine Lagarde, the European Central Bank president, has gone on to endorse the digital euro currency rollout as well as reduce the bloc’s dependence on overseas payment networks.
While Visa Inc. goes on to defend its pricing by pointing to minimal fraud risk, security, and uninterrupted services, Mastercard Incorporated happens to justify the fee by stressing consumer choice as well as global dependability.
It was in early 2019 that Mastercard Incorporated was fined $646 million for going ahead and artificially raising the costs of its card payments. Apparently, in 2024, a $30 billion settlement that was reached by two companies was, as a matter of fact, rejected by a US federal judge. This new EU scrutiny could as well potentially intensify the caution of investors and pressure on Visa and Mastercard. At present, both the stocks happen to hold consensus buy ratings with their upside potentials of 10.39% and 10.72%, respectively.