EU Smacks Mastercard with $650 Million Fine for Doing What Credit Card Companies Do Best

By The European Commission on Tuesday slammed Mastercard with a 570.6 million euro ($650 million) fine after finding the company guilty of breaching antitrust rules. According to information released by the EU regulatory body, the original fine was reduced by 10 percent because Mastercard cooperated with the Commission during the investigation.

Mastercard Overcharged Customers, Colluded against Merchants

Mastercard, which is the second biggest card brand in the European Economic Area, forced acquiring banks to apply the interchange fees of the country where the retailer was located. These practices restricted merchant options and stopped them from finding other cards with friendlier transaction fees.

Prior to December 2015, interchange fees in the EEA varied widely between countries. In December 2015, the EU capped interchange fees at a maximum of 0.2 percent of total transaction value and 0.3 percent  of transaction value for debit and credit cards respectively. This interchange fee regulation reduced retailers’ costs by a significant margin that reflected in the cost of items.

EC Investigation and Half-a-Billion Dollar Fine

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In 2013, regulators opened a formal investigation into Mastercard to determine if its acquiring rules breached any of the antitrust laws of the EU. After its investigations, the Commission determined that Mastercard’s rules racked up more costs for both retailers and consumers as the retailers had to pay more bank charges which then translated to higher cost of items.

The Commission determined that if Mastercard’s rules were nonexistent, retailers would have the opportunity to enjoy lower bank rates from countries with lower interchange fees, which would then lower costs for card users and non-card customers alike.

In a statement released on Tuesday, Margrethe Vestager, the commissioner in charge of competition policy said:

“European consumers use payment cards every day, when they buy food or clothes or make purchases online. By preventing merchants from shopping around for better conditions offered by banks in other Member States, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.”

The Commission arrived at the 570 million euro figure based on the duration of the infringement, the amount of sales recorded during the infringement period and Mastercard’s level of cooperation during the investigation. In return for admitting to infringement of EU antitrust and competition rules, Mastercard received a 10 percent fine reduction.

It will be recalled that in July 2018, Google was handed a $5 billion fine by the European Commission after also being found guilty of engaging in non-competitive behaviour by forcing manufacturers to make Chrome and Google Search the default search tools on Android devices.

In any case, the fine didn’t seem to have much of an effect on Mastercard’s share price. MA shares dropped by 1.26 percent to $199.46, which was somewhat better than the 1.42 percent decline seen in the broad S&P 500 index.

Author: David Hundeyin
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Major Banks Sign Up for New EU Commission Blockchain App Association

The European Commission, the EU’s executive body, is launching a new blockchain association next year and major banks are already on board.

Spanish banking giant BBVA announced Tuesday that it and four other banks have joined the EC’s planned International Association for Trusted Blockchain Applications (IATBA), which could be a legal entity as early as first quarter of 2019. While the remaining banks were not named in official announcements, some sources say Santander is also one of the group.

The initiative was announced at a recent EU blockchain roundtable event called “Bringing industries together for Europe to lead in blockchain technologies,” held on Nov. 20 in Brussels, Belgium.

The new association will have representatives from both public and private sectors with an aim to “garner support from private blockchain and [distributed ledger technology] experts to contribute to outline the EU’s strategy regarding these technologies,” the BBVA said.

The association is aimed to develop guidelines and protocols for the blockchain industry, and promote the EU’s blockchain standards internationally. It will further provide information for the implementation of Europe’s blockchain strategy.

Carlos Kuchkovsky, BBVA’s head of research & development for new digital business, said that the association could have an important role to play in terms of “establishing blockchain best practice and standards and at avoiding fragmentation on a European level.”

Kuchkovsky also believes that the EC initiative will help provide more clarity to the “regulatory uncertainty” that currently surrounds the use of blockchain tech.

He added:

“Blockchain is not only a technology, but it engenders new business models creating a tokenized economy and paving the way to a decentralized economy in the future.”

As part of its moves to adopt and develop blockchain across the economic bloc, the EC in April formed the European Blockchain Partnership (EBP) along with 27 member countries to support the delivery of cross-border digital public services.

Author: Yogita Khatri
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EU Urged to Develop Common Regulations on Cryptocurrency

The European Union should adopt common rules on cryptocurrencies and scrutinize how new digital units are distributed to investors and subsequently traded, according to a report prepared for EU finance ministers.

In the report, the Brussels-based think tank Bruegel argues for EU-level regulation of crypto exchanges and clearer rules on “Initial Coin Offerings” (ICOs) to control risks and exploit the potential of the industry and its underlying Blockchain technology.

The document, seen by Reuters, is due to be presented to the ministers who are meeting on Friday and Saturday in Vienna.

So far EU authorities have avoided comprehensive regulation because of the sector’s relatively small size and the low percentage of trade in bitcoin, the most popular cryptocurrency, into euros. However, they have long worried about the market’s high volatility and the risk of fraud and money laundering.

The market capitalisation of crypto assets, such as cryptocurrencies and crypto tokens issued for an ICO, has fallen to around $200 billion in August from a peak of more than $800 billion in January. Bitcoin has dropped by about 60 percent against the dollar this year.

Now the possible expansion of the crypto exchange business in Europe and considerable interest in ICOs in EU countries, which account for 30 percent of the global market in terms of projects funded, is pushing regulators to take a closer look.

Hong Kong-based Binance, one of the world’s largest crypto exchanges, plans to move to Malta, the EU’s smallest state, after a Chinese crackdown on the industry.

Austria, which holds the rotating EU presidency, is asking whether EU regulations need changing to address “potential risks posed by crypto assets” and harness their full potential, according to a preparatory document for the meeting of finance ministers.

Bruegel says regulation of bitcoins as such is impossible because of their virtual nature, but that of entities dealing with the instruments, such as exchanges, could be subject to stricter disclosure rules or even be banned. “As done in China, mining farms can be forbidden,” the document said, referring to the business of releasing new cryptocurrencies.


New EU rules on money laundering will increase checks on crypto exchanges but are unlikely to be fully operational in all member states before 2020. Regulation of the platform business is largely left to national authorities.

Citing the planned Binance move to Malta, Bruegel said this “might suggest that there is scope for regulatory arbitrage” following a crackdown on exchanges in some Asian countries.

However, the report also said exchanges seeking jurisdictions with lighter regulation might need to be tolerated for some time “to experiment and learn about the best approaches to this fast-developing technology.”

Clearer rules on ICOs could also be useful as most involve utility tokens, where future services are promised in exchange for a current payment – a business that is currently often unregulated. Only the smaller share of ICOs that are securities usually fall under EU financial regulations.

Author: Francesco Guarascio
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EU Adopts Rules to Reduce Anonymity for Crypto Users

A directive affecting the crypto sector in Europe has been adopted by the EU Council. The document updates the anti-money laundering legislation of the European Union to address, among other issues, “the risks linked to virtual currencies.” The new rules aim to reduce anonymity for both users and transactions with requirements for know-your-customer procedures that crypto platforms will have to implement. Meanwhile, a high-ranking ECB official has called for segregating the crypto business from traditional finances.

Authorities to Monitor the Use of Cryptocurrencies

“Strengthening EU rules to prevent money laundering and terrorism financing” has been declared as the main purpose for the changes adopted as part of an “action plan” launched after the terrorist attacks in Europe in 2016. The new directive sets out to “close down criminal finance without hindering the normal functioning of the payment systems,” according to the Council’s press service. The amendments to EU Directive 2015/849 of the European Parliament and the Council of May 20, 2015, were adopted at a meeting of the General Affairs Council on Monday, without discussion. The move follows an agreement with the European Parliament form December 2017. In April this year, MEPs voted to support the deal to “bring cryptocurrencies under closer regulation.”

The main changes involve addressing the “risks linked to virtual currencies” by taking steps to reduce anonymity for both crypto traders and crypto-related transactions. According to the texts, providers of exchange services between virtual and fiat currencies, as well as custodian wallet providers, will be obliged to identify suspicious activities. The directive states that authorities should be able to monitor the use of cryptocurrencies through these platforms, and the national financial intelligence units should have access to information allowing them to associate crypto addresses with the identities of their owners.

The authors acknowledge that the measures in the document do not entirely address the issue of anonymity. These measures should be detailed by member-states which will have 18 months to transpose the provisions of the directive into their national regulatory frameworks. Once that happens, crypto exchanges across the Union will be obliged to comply with stricter anti-money laundering (AML) and counter-terrorism financing (CTF) guidelines, including by introducing full customer verification on their platforms.

Some companies have already taken steps in that direction. Localbitcoins, the popular Helsinki-based peer-to-peer exchange, has recently updated its Terms of Service. It admitted that the changes had been introduced mainly due to EU regulations. They highlight identification requirements and warn users that in some situations, such as trading over certain volume limits, or in cases of account hacking/recovery and fraud investigations, they will be required to submit identification documents. The new terms will be enforced as early as this month.

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Virtual Currencies Defined

The EU Council states that “virtual currencies should not to be confused with electronic money.” Its directive points out that although cryptos can be used as a means of payment, they could also serve other purposes and find broader applications such as means of exchange, investment, and store-of-value.

EU Adopts Rules to Reduce Anonymity for Crypto UsersA definition of “virtual currencies” has been provided, in which they have been referred to as “digital representation of value that is not issued or guaranteed by a central bank or a public authority.” The directive also notes that cryptocurrencies are not attached to a legally established currency and do not have the legal status of fiat money, but are accepted by natural or legal persons as a means of exchange. Cryptocurrencies can be transferred, stored and traded electronically, the text reads.

The European institution has identified custodian wallet providers as “entities safeguarding private cryptographic keys on behalf of their customers in order to hold, store and transfer virtual currencies.” According to the legal document, national authorities should ensure that they, along with the providers of crypto exchange services, are registered or licensed.

The directive also introduces changes regarding anonymous prepaid bank cards to “deny terrorists this means of financing.” The threshold for mandatory identification of their holders has been lowered to EUR 150. Identity verification will also be required in cases of remote payment transactions exceeding EUR 50.

ECB Official Wants to “Ring-Fence” Crypto Business

EU Adopts Rules to Reduce Anonymity for Crypto UsersWhile Brussels is moving to strengthen rules governing crypto transactions, Frankfurt is suggesting that the entire crypto business should be segregated from traditional finances. According to a report by Reuters, a high-ranking representative of the European Central Bank has stated that banks should separate any activities related to virtual currencies (VCs) from their other operations and even back them with capital to reduce the risk. The official also called for regulating issuers of cryptos and tokens, exchanges, and any bank or clearing house dealing in them.

“Due to the high volatility of virtual currencies, it might seem appropriate to require any VC trading to be backed by adequate levels of capital and segregated from other trading and investment activities,” Yves Mersch, member of the ECB board, said at a conference in Turkey this Monday. He added that the crypto market was too small to endanger financial stability but cautioned this could change. Mersch emphasized that “There’s a need to examine whether any VC activity carried out by financial market infrastructures should have to be ring-fenced.”

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UK-EU customs partnership ‘still on table’

A new “customs partnership” with the EU – which is fiercely opposed by some Tory Brexiteers – is still on the table, the business secretary says.

Greg Clark warned about the effect of border checks on manufacturing jobs, saying whatever replaces the customs union was of “huge importance”.

He added whichever option was chosen would “take some time” to put in place.
Euro sceptic backbencher Jacob Rees-Mogg criticised “Project Fear” warnings about job losses after Brexit.

He said if the partnership model was adopted, “we would not in effect be leaving the European Union”.

But Mr Clark was supported by former home secretary Amber Rudd, while Remain-supporting Tories criticised pro-Brexit “ideologues”, saying they did not represent the party at large.

All EU members are part of the customs union, within which there are no internal tariffs (taxes) on goods transported between them. There is also a common tariff agreed on goods entering from outside.

The UK government has said it is leaving the EU customs union so that it can strike its own trade deals around the world, something it cannot do as a member. But ministers have not yet agreed how to replace it.

The UK is under pressure to make progress on the issue before next month’s EU summit.

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Clark’s Toyota warning

Speaking on the BBC’s Andrew Marr Show, Mr Clark said the UK would leave the customs union in 2019 with Brexit, and that finding the right replacement was of “huge importance”, pointing to the needs of manufacturers like Toyota to avoid friction at the borders.

At last week’s Brexit sub-committee meeting of senior ministers, several are believed to have voiced concerns about one of the two options put forward by the government – whereby Britain would collect tariffs on behalf of the EU for goods destined for member states.

Mr Clark said the ministers had had “a much more professional, collegiate discussion” than reports suggested.

And he said the partnership proposal had not been killed off, saying it offered the “very important” feature of avoiding paperwork at UK-EU borders.

But he added that this model was “not perfect” because arrangements would be needed to refund firms if they were only liable for lower UK rates.

He said this, and an alternative proposal of using technology and advanced checks to minimise border disruption, needed “further work”, and that whichever was chosen, “it will take some time to have them put in place and available”.

The business secretary said it was “possible” this could take two or three years after the UK leaves the EU, suggesting that different elements of the plan could be implemented at different times.

Former home secretary Amber Rudd – who resigned last Sunday over a deportations row – backed Mr Clark’s comments.

Ms Rudd, a leading voice in the 2016 campaign to stay in the EU, tweeted that the business secretary was “quite right” to argue for a “Brexit that protects existing jobs and future investment”.

Amber Rudd MP

✔ @AmberRuddHR

@GregClarkMP quite right, making the case clearly and yes, passionately, for a Brexit that protects existing jobs and future investment #marr
9:55 AM – May 6, 2018

The government’s two customs options

A ‘highly streamlined’ customs arrangement – This would minimise customs checks rather than getting rid of them altogether, by using new technologies and things like trusted trader schemes, which could allow companies to pay duties in bulk every few months rather than every time their goods cross a border.

A customs partnership – This would remove the need for new customs checks at the border. The UK would collect tariffs set by the EU customs union on goods coming into the UK on behalf of the EU. If those goods didn’t leave the UK and UK tariffs on them were lower, companies could then claim back the difference.

Opposition from Brexiteers

Mrs May has been repeatedly urged by Brexiteers to abandon the partnership option, which critics say would keep the UK tied to EU rules.

One observer was quoted saying it would be “unimaginable for the prime minister to press on with the hybrid model after it has been torn apart by members of her own Brexit committee”.

Speaking on ITV’s Peston on Sunday, influential backbench MP Jacob Rees-Mogg – who has previously labelled the proposal “cretinous” – dismissed warnings about the impact on jobs if it is rejected.

“This Project Fear has been so thoroughly discredited that you would have thought it would have come to an end by now,” he said.

“We will have control of goods coming into this country – we will set our own laws, our own policies, our own regulations, and therefore we will determine how efficient the border is coming into us.”

The customs debate is central to the question of border between Northern Ireland and the Republic, with supporters of a customs union saying anything else will mean checks and a “hard border”.

But Arlene Foster, who leads the Democratic Unionist Party, said a “free flow” of trade did not require a customs union, adding that a border was already in place between the two different jurisdictions.

However, some pro-EU Tories are still pushing for much closer economic ties to the EU.
Asked about Mr Rees-Mogg and other Brexiteers, former education secretary Nicky Morgan told Pienaar’s Politics on BBC Radio 5 live people who “shout loudest” did not necessarily represent the majority of Conservatives.

She said Tory rebels on her side of the debate would be prepared to defy the party whip in key votes “in the national interest” but that the MPs who were “sabre-rattling about leadership” were those who wanted “the hardest of hard Brexits”.

And ex-business minister Anna Soubry told The Sunday Politics Mrs May had to “see off” those who operate a “party within a party” who do not represent “the country at large”.
“These are ideologues,” she added.

The CBI welcomed Mr Clark’s commitment to “frictionless” trade, saying the customs union should remain in place “unless and until an alternative is ready and workable”.

Labour Brexit splits

Labour, meanwhile, faced criticism of its position on Brexit from pro-EU voices in the party.
The leadership was accused of “complete cowardice” by Labour peer Lord Alli for not supporting a Lords amendment aimed at keeping the UK within the European Economic Area (EEA), like Norway, after Brexit.

EEA members get access to the single market – with free movement of people, goods, service and money – without being EU members.

But shadow international trade secretary Barry Gardiner said such an arrangement would reduce the UK to being a “rule taker” without a seat at the table when decisions on regulations are made.

Labour says it would seek to draw up a new customs union with the EU after Brexit, and would try to persuade Brussels to change the rules and allow it to strike deals around the world.

Shadow chancellor John McDonnell told the Marr show that despite the criticism, the party had not lost votes by not being “anti-Brexit” or “trying to reverse the referendum”.
“What people want is a traditional British compromise,” he said.

“Respect the referendum result, but get the best deal you can to protect our economy and protect our jobs.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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