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It just got cheaper for tourists in Europe to use their Visa and Mastercard

You can thank the European Union for that.

It just got cheaper for tourists in Europe to use their Visa and Mastercard
[Photo: rawpixel.com/Pexels]

The European Commission has announced that Visa and Mastercard have agreed to reduce the fees merchants pay when a tourist from outside of the EU uses their credit or debit card in the 28 member states. In exchange for Visa and Mastercard reducing a specific fee, the EU has agreed to end an antitrust investigation into the companies.

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At the heart of the matter is what is known as inter-regional interchange fees, or “inter-regional MIFs.” These MIFs are fees set by Visa and Mastercard and charged to a retailer when a consumer buys an item from inside a country their card was not issued in. Retailers and consumers have no way of influencing the size of the MIF fee, which is almost always passed on to the consumer.

Under the terms of the new agreement with the European Commission, Visa and Mastercard will cut the inter-regional MIFs by 40% on average, saving tourists money when they come to an EU member state. Announcing the agreement, the EC’s commissioner in charge of competition policy, Margrethe Vestager, said:

“Mastercard and Visa have committed to significantly reduce the interchange fees applied to payments made in Europe with cards issued elsewhere. The commitments, which are now binding on Visa and Mastercard, will reduce the costs borne by retailers for accepting payments with cards issued outside the EEA. This, together with our January 2019 decision on Mastercard’s cross-border card payment services, will lead to lower prices for European retailers to do business, ultimately to the benefit of all consumers.”

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