Visa, Mastercard fees probe widens as EU antitrust regulators look into market power

EU antitrust regulators have expanded their investigation into Visa and Mastercard's fee practices, seeking feedback from terminal providers and payments companies regarding potential anti-competitive behavior. The European Commission's inquiry, initiated in September following merchant complaints, focuses on scheme fees charged by Visa and Mastercard, which process approximately two-thirds of Eurozone card payments. The questionnaire requests detailed information on the number, nature, and communication of fee changes between 2017 and 2024, potentially indicating the Commission is exploring whether Visa and Mastercard hold a dominant market position and are abusing it.

Analysis

EU antitrust regulators have intensified their scrutiny of Visa (V) and Mastercard (MA) by widening their investigation into the companies' fee structures, now seeking detailed feedback from terminal providers and payments companies. This expansion follows an earlier questionnaire distributed to retailers and merchants and stems from an inquiry initiated in September due to complaints regarding potentially anti-competitive practices. The European Commission is examining the period between 2017 and 2024, focusing on the number of fees, introduction of new fees, changes to existing ones, the mandatory nature of certain services, and the clarity and timeliness of communication regarding these fees. Given that Visa and Mastercard process approximately two-thirds of card payments in the Eurozone, the investigation is exploring whether they hold and potentially abuse a dominant market position. The sentiment surrounding this development is moderately negative, with specific ticker sentiment for both V and MA notably adverse, reflecting investor concern over potential regulatory action. The investigation's focus on how the schemes must be accepted and how fees have been raised suggests regulators are building a case that could lead to charges of anti-competitive behavior, carrying significant implications for both payment giants.

Key Decisions for Investors

• Investors should closely monitor the progress of the EU antitrust investigation, as formal charges or findings of anti-competitive practices could lead to substantial fines and mandated changes to Visa's and Mastercard's lucrative fee structures in the Eurozone.
• Consider the potential for increased regulatory risk and its impact on future revenue and profitability for both Visa and Mastercard when evaluating current or prospective holdings.
• Assess the degree to which current valuations account for this ongoing regulatory overhang, particularly if the investigation escalates or results in adverse findings.