Some of Europe’s largest retailers and online companies have asked the European Commission to take action against Visa (V) and Mastercard (MA) by saying that their high and unclear fees are hurting competition and the region’s economy. Interestingly, the two U.S.-based companies handle about two-thirds of card payments in the eurozone, and retailers say that they have been raising fees without enough oversight. As a result, it is difficult to understand what exactly they are being charged for.
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The complaints have led the European Union to consider creating a digital euro to reduce its reliance on American payment firms. However, the slow progress in passing digital currency laws has left some businesses and officials frustrated. In a letter dated May 13, the retailers said that Visa and Mastercard have made their pricing rules so complicated that businesses can’t challenge the fees. They also pointed to a report showing that the two companies raised their fees by nearly 34% between 2018 and 2022, with no noticeable improvement in service for EU merchants or shoppers.
The letter was sent to top EU officials and signed by several industry groups representing companies like Aldi, Amazon (AMZN), Ikea, H&M (DE:HMSB), and eBay (EBAY). In addition, they are asking the Commission to use EU antitrust rules against Visa and Mastercard, set limits on the fees, require more transparency, and give regulators more power to review the companies’ actions. So far, Visa and Mastercard haven’t responded to the accusations.
Which Payment Stock Is the Better Buy?
Turning to Wall Street, out of the two stocks mentioned above, analysts think that Mastercard stock has more room to run than Visa. In fact, Mastercard’s price target of $633.88 per share implies 10.6% upside versus Visa’s 7.5%.
