Europe’s leading bricks-and-mortar and online retailers have launched a concerted push for the European Commission to intervene against what they describe as “excessive and opaque” fees levied by the dominant card networks Visa and Mastercard. In a joint letter to senior EU officials, major retail lobbies—including the likes of Amazon, Carrefour, Ikea and Marks & Spencer—warned that these high charges undermine the bloc’s competitiveness, stifle innovation and ultimately burden European consumers.

Retailers argue that Visa and Mastercard have effectively wielded their market power to ratchet up fees without oversight or meaningful challenge. According to the appeal sent to the Commission’s antitrust chief, financial services commissioner and economy commissioner, interchange and scheme fees charged on each card transaction have risen by nearly 34 percent between 2018 and 2022—an average annual hike far above headline inflation. Yet, they note, the card giants have not delivered corresponding improvements in network reliability, speed or fraud prevention services that would justify such fee increases.

Opaque Fee Structures, Uncertain Costs

At the heart of the retailers’ grievance is the complexity and opacity of card network pricing. Merchants contend that fee schedules are so labyrinthine they cannot ascertain precisely what they are paying for or benchmark costs against alternatives. Interchange fees—typically levied on the merchant’s acquiring bank and intended to compensate the issuing bank—are capped under existing EU rules at 0.3 percent for credit cards and 0.2 percent for debit cards. But retailers say that Visa and Mastercard circumvent these caps through a web of additional “scheme” fees, cross-border surcharges and routing mandates that drive total costs as high as 2.5 percent of transaction value in many Western European markets.

Smaller retailers, in particular, have no leverage to negotiate lower rates, placing them at a disadvantage to larger chains. Even multinational e-commerce platforms, which can spread card charges over vast volumes, point out that incremental fee hikes eat directly into razor-thin retail margins. “We bear these costs in our price tags, and ultimately consumers pay more as a result,” said one industry spokesperson. “It’s not a small burden when annual card network fees can total hundreds of millions of euros across the sector.”

In their letter, retailers urged the Commission to use existing antitrust powers to investigate whether Visa and Mastercard have abused their dominant positions in breach of EU competition law. They also called for an overhaul of the Interchange Fee Regulation (IFR), enacted in 2015, to impose explicit price controls on all network charges—not just interchange—and to require full transparency of fee schedules. Additional recommended measures include:

• *Non-Discrimination Rules: Forcing networks to treat all merchants, banks and payment service providers equally, eliminating preferential fee tiers or volume-based rebates that privilege larger players.
• *Regulator Scrutiny Powers: Granting national authorities the ability to review and challenge any fee increase by Visa or Mastercard before it takes effect.
• *Routing Choice: Compelling merchants to have the freedom to route transactions via the lowest-cost network without technical or contractual restrictions.
• *Publication Mandates: Ensuring that scheme rules and fee structures are publicly available and clearly understandable in plain language.

Retail groups argue that without such reforms, Europe will remain reliant on U.S.-based card networks and unable to foster homegrown alternatives. This reliance, they say, has prompted the EU to explore the concept of a digital euro in part to reduce dependence on private-sector operators. However, delays and lengthy legislative processes have left policymakers and businesses frustrated at the lack of viable domestic payment solutions.

Consumer groups have largely echoed retailers’ concerns, noting that card fees ultimately filter down to higher prices for everyday goods and services. In one estimate cited by retail associations, average card fees add up to more than €200 per household annually. Small and medium-sized enterprises (SMEs), which often operate on very narrow profit margins, are disproportionately affected: some estimate that up to 40 percent of their transaction costs are absorbed by card network charges.

“The story of two merchants highlights the disparity clearly: a local bakery paying 1.9 percent per transaction versus a supermarket chain paying 1.2 percent for the same card usage,” said a small-business representative. “There’s no justification for this scale of discrepancy in a single currency area. Unless corrected, these fees will continue to stifle competition.”

Visa and Mastercard Push Back

Visa and Mastercard have defended their pricing structures, insisting that fees reflect the value of a global payment network that provides security, fraud detection and system resilience. Both networks point to investments in tokenization, real-time authorization and AI-powered fraud tools, arguing these enhance consumer trust and reduce losses for merchants and banks alike. Visa, for its part, has highlighted partnerships with local banks to drive financial inclusion and boost digital payment adoption in emerging European markets.

Yet critics say that while network reliability remains high, incremental improvements are marginal compared to the steep fee increases. They also point out that fraud rates in the euro zone have remained stable, suggesting that spending on security may not have grown in line with network revenues. Independent analysts note that the combined annual turnover of Visa and Mastercard in Europe—over €20 billion in revenue—confers considerable scope for price moderation without jeopardizing network health.

The retailers’ letter comes at a time when EU policymakers are already under pressure to bolster the bloc’s digital autonomy. The Digital Markets Act (DMA) and Digital Services Act (DSA) have set new rules for large online platforms, but payments have largely flown under the radar. Some Commission officials view the card networks’ dominance as a strategic vulnerability, particularly given rising U.S.–EU tensions and concerns about data sovereignty.

Interviews with EU insiders reveal growing sympathy for the retailers’ case. Several member states have already signaled support for tougher oversight of payment schemes, while the European Central Bank has flagged the need to diversify payment infrastructure. Earlier this year, the ECB launched consultations on “instant payments” and urged banks to offer cheaper, faster alternatives to card networks.

If the Commission chooses to act, an antitrust investigation could kick off by year-end, potentially resulting in fines or binding commitments. More sweeping reforms to the IFR, however, would require agreement among all 27 member states, a process likely to extend into 2026. Retailers are hopeful that the combined weight of their lobbying and shifting political winds will accelerate the legislative timetable.

Beyond Visa and Mastercard, the debate touches on the future of European payments more broadly. A successful clampdown on card fees could open space for mobile wallets, peer-to-peer systems and pan-European schemes that leverage QR codes or real-time bank transfers. The proposed digital euro, if adopted, might operate as a complementary payment rail, underpinned by central-bank digital currency and accessible to all citizens.

Banks are watching developments closely. While some incumbent banks benefit from card-issuing fees, many have joined retailers in calling for fairer revenue sharing and competition. Fintech startups—ranging from digital challenger banks to cross-border transfer apps—stand to gain if card networks’ stranglehold loosens, potentially accelerating innovation in areas such as e-invoicing, digital identity and blockchain-based settlements.

In the coming weeks, the European Commission will review the retailers’ submission and decide whether to open a formal inquiry. Retail groups plan to follow up with targeted meetings in Brussels, supported by further data on fee impacts and consumer surveys. On the political front, MEPs in the Internal Market and Consumer Protection Committee are preparing a report that could recommend extending fee caps to scheme charges and aligning EU payments legislation with digital market rules.

The outcome of this campaign will be closely watched by global players, from U.S. card networks to Asian fintechs, as Europe seeks to chart a more autonomous and competitive payment landscape. For now, retailers are resolute: without decisive action, they warn, card network fees will continue to erode Europe’s retail margins, hamper SMEs and impose hidden costs on every consumer transaction. (Adapted from Finextra.com)