Notice pursuant to Article 19(3) of Council Regulation No 17 — Cases COMP/34.324 — Maestro, COMP/34.579 — Europay (Eurocard-MasterCard) and COMP/35.578 — Europay Membership Rules and Licensing (Text with EEA relevance)

Official Journal C 089 , 13/04/2002 P. 0007 - 0010

Notice pursuant to Article 19(3) of Council Regulation No 17(1)

Cases COMP/34.324 - Maestro, COMP/34.579 - Europay (Eurocard-MasterCard) and COMP/35.578 - Europay Membership Rules and Licensing

(2002/C 89/07)

(Text with EEA relevance)


1. Between 1992 and 1995 Europay International SA notified the Commission of various rules and regulations governing its international payment cards, in particular its Eurocard-MasterCard card (in Europe most commonly a deferred debit/charge card) and its Maestro debit card. In 1994 the Eurocard-MasterCard notification was extended to the entirety of the EEA territory. In 1995 Europay International notified its Membership and Licensing Rules, which are applicable to all its products.

2. On 23 May 1997 the Commission received a complaint by EuroCommerce, a retail, wholesale and international trade representation in the European Union, concerning, inter alia, various aspects of the Europay International payment card scheme.


2.1. Europay International

3. Europay International (hereafter "Europay") is a public limited liability company ("société anonyme") incorporated under Belgian law which was created on 1 September 1992, following the merger between Eurocard International and Eurocheque International(2).

4. Europay's aim is to develop and operate payment systems and related services for the benefit of its licensees. Through EPS-net, a network which is operated by its subsidiary European Payment Services SA, Europay provides global data exchange, authorisation and clearing and settlement services to its members. Europay itself does not issue cards to cardholders or acquire merchants for card acceptance, but its members do. Europay has over 7000 members.

5. Europay has developed "pay before" (eurotravellers cheques and CLIP electronic purses), "pay now" (eurocheques, Maestro cards) as well as "pay later" products (Eurocard-MasterCard).

6. Europay is owned by various financial institutions and by MasterCard International(3). The shareholders within the EU are all national payment card companies or other forms of national associations of banks, together holding a share of about 80 %. Most EU shareholders are also Europay members licensed to issue Europay cards and to acquire merchants for Europay transactions.

7. Europay's Board of Directors decides on the adoption, modification and amendment of the rules and regulations relating to the various Europay payment services, approves applications for membership and licences and sets the level of the multilateral fallback interchange fees, which the merchant bank has to pay to the cardholder bank for each cross-border Europay purchase transaction, and by default for domestic transactions for which no distinct domestic interchange rate has been defined.

8. Through alliance agreements with MasterCard Europay has the exclusive rights to manage the Mastercard, Maestro and Cirrus trademarks, owned by MasterCard, in Europe.

2.2. Europay members

9. Europay members must be credit institutions or entities owned by credit institutions; however credit institutions or entities and their subsidiaries which are competing international payment systems or which are more than 50 % owned or controlled, directly or indirectly, by a competing international payment system, are not eligible for membership. All members have to sign the Europay Membership and Licence Agreement. A separate product licence is required for each Europay-licensed product that members want to issue and acquire. There are two main types of licence in the Europay system: a principal licence and an affiliate licence. The holder of a principal licence will deal directly with Europay and may propose affiliate licensees to Europay. The principal licensee is jointly and severally liable for the transactions of its affiliate licensees.


3.1. The functioning of the Europay card system

10. The Europay notifications concern the operation of payment card systems. Broadly speaking, Europay cards can be used either to purchase goods or services or to obtain cash, either from a bank counter or from an ATM. In the first case four parties are involved: the Europay cardholder, the issuing bank (which issues the card to the cardholder), the merchant, and the acquiring bank (which acquires merchants for Europay card acceptance). In the case of a ATM transaction there are only three parties involved: the Europay cardholder, the issuing bank and the ATM operator.

3.2. Inter-system competition

11. Apart from Europay, there are currently the following major international payment organisations active on the European market: Visa International, Japan Credit Bureau (JCB) and the international proprietary systems American Express and Diners Club International. MasterCard International is active in Europe under the terms of its alliance with Europay. Of these international payment organisations Visa is by far the most important competitor of Europay in Europe. Together Visa and Europay account for around 90 % of international cards issued in the EU. Visa is in particular strong in the UK, Spain and France. Europay on the other hand is stronger in Germany, the Netherlands and Austria.

12. Apart from international payment card operators various national payment card operators are also active in the different Member States.

3.3. Intra-system competition

Issuing Europay cards

13. Originally Europay had one sole member in each Member State issuing cards. Over the years the situation has changed in most Member States and other members, either principal or affiliate, were nominated. Nowadays, the market for issuing Europay cards is competitive: in all Member States there are several issuers.

Acquiring merchants for Europay card-acceptance

14. Intra-system competition on the acquiring market on the other hand is less intense: in four Member States, namely Austria, Denmark, France and Germany, Europay acquirers still formally hold exclusive rights for acquiring Eurocard-MasterCard. These exclusivities have however de facto been abolished since May 2000 (see below). In Belgium, Greece, the Netherlands and Spain the exclusive rights of the Europay members were relinquished in May 1993. It is only recently that other Europay acquirers have entered these markets, which explains why, in practice, these markets are still dominated by the formerly exclusive Europay members. Also other Member States, such as Luxembourg, Portugal and Finland are de facto dominated by one Europay acquirer.


4.1. General

15. The notifications by Europay concern the rules and regulations governing Europay International and its members (that is, the Europay Membership and Licensing Rules) as well as the international provisions relating to various Europay payment cards (the MasterCard Bylaws and Rules, the Eurocard Rule Book and the Maestro manual, European region). In addition, the notification covers various standard product licence agreements and the standard Membership and Licence Agreement. All notified Europay arrangements will hereafter be referred to as the "Europay Rules".

16. The Europay Rules govern primarily the relationship between Europay and its members, meaning banks issuing Europay cards and acquiring merchants for Europay card acceptance. In addition, the notified rules also contain clauses relevant for the relationship between those Europay members (the inter-bank relationship). Moreover, the Rules contain clauses with regard to the relationship between acquiring banks and merchants (such as the so-called "No-discrimination" Rule and the "Honour all cards" Rule).

4.2. Specific provisions

17. This notice only concerns the specific provisions detailed below. In particular, it does not cover any interchange fees(4) laid down in any of the notified agreements, nor does it cover any rules relating to ATM cash withdrawal cards or functions.

4.2.1. The No-discrimination Rule (NDR)

18. According to the Europay Rules, merchants are prohibited to add any charges to cardholders who pay with their Eurocard-Mastercard and/or Maestro card. However, discounts for payments by cash are allowed.

4.2.2. The principle of territorial licensing

19. As a general rule a Europay member is only allowed to issue Europay payment cards that are linked to accounts domiciled within its area of use. Moreover, a Europay member may only acquire transactions that have taken place within this area. The area of use is defined by Europay as the geographical territory in which the member is licensed to use a particular Europay trademark, which is usually a single country. A Europay member can make an application for an additional licence for issuing and acquiring in any other territory, where it has the right to carry on its activities in the field of payment systems.

4.2.3. The Europay Rules on cross-border issuing(5)

20. There are some specific exceptions on the principle of territorial licensing for Eurocard-MasterCard. Passive cross-border issuing is allowed, as is issuing to citizens of any country for which the member holds a licence, regardless of their country of residence, and under certain conditions cross-border issuing of corporate cards to employees of multinationals is possible. Moreover, Europay members can carry out cross-border issuing activities without limitation, provided that an additional licence for the intended country of issuance has been obtained and that the cards are issued under the corresponding licence. Europay does not require the establishment of a branch or subsidiary in the additional area of use. Furthermore, Europay has clarified that under its rules the issuance of a Eurocard-MasterCard card is not linked to the holding of a bank account within the area of use; only a card account (a mere reference number that is used for the billing of expenses linked to the use of the credit cards concerned) must be opened with the cross-border issuer.

4.2.4. The Europay Rules on cross-border acquiring(6)

21. Pursuant to the Europay Rules cross-border acquiring is allowed, provided that an additional licence for the country where acquiring is intended, has been obtained. Europay does not require the establishment of a branch or subsidiary in the additional area of use. Since the remaining exclusive Eurocard-MasterCard licensees in some countries (see below) have, since May 2000, de facto relinquished their exclusive acquiring rights, they no longer have the power to block cross-border activities. In addition, since January 2001, Europay allows its members to acquire centrally transactions from any merchant, located in western Europe, including all countries in the European Economic Area (so-called "central acquiring"). Initially, central acquiring was possible for international airlines only, but gradually Europay has enlarged the categories of international merchants which could be centrally acquired to, since January 1999, all international merchants. In December 2000 the Board of Directors of Europay decided to liberalise the merchant criteria for central acquiring in western Europe. Since January 2001 it is possible to acquire centrally transactions from any merchant located in western Europe, irrespective of the number of countries in which the merchants has outlets.

4.2.5. The modified exclusivities rules

22. In some countries within the European Economic Area (Austria, Denmark, France, Germany, Iceland and Norway), Europay has given a single licensee an exclusive Eurocard-MasterCard licence, which gives it exclusive rights to acquire Eurocard-MasterCard transactions. Although these exclusive rights will formally remain in place, Europay has agreed with its members through an addendum to the exclusive licence agreements that since 1 May 2000(7), any Europay member may apply in these countries for a so-called special affiliate acquiring licence, by which the exclusive right of the Europay licensees in the countries concerned comes de facto to an end.

4.2.6. "No acquiring without issuing" Rule

23. Initially, Eurocard-MasterCard principal licensees were obliged to issue either directly or indirectly through their affiliates a reasonable number of cards in each area of use for which they are licensed. In December 2000 the Board of Directors of Europay decided to relax this rule within western Europe. Since 1 May 2001, a principal licensee is only required to issue a reasonable number of cards in a minimum of one country for which it holds a licence.

24. The number of Eurocard-MasterCard cards that must be issued and maintained is set out in the principal licensee's consolidated business plan and is based on, inter alia, the size and capabilities of the principal licensee and its affiliates and of the characteristics of the market and the area of use. Moreover, principal licensees that wish to start acquiring businesses must be able to demonstrate that their card issuance programme has been irrevocably launched and that they and/or one or more of their subsidiaries have issued a number of cards which is consistent with the business plan approved by Europay. According to the amended Europay Rules, a member that holds licences for more than one western European country has to meet these requirements in only one such country.

4.2.7. The "honour all cards" Rule

25. Merchants are obliged to honour without discrimination all valid Eurocard-MasterCard cards when properly presented as payment by customers for transactions, and to maintain a policy of not discriminating among customers seeking to make purchases through use of a Eurocard-MasterCard. Merchants must honour without discrimination all valid Maestro cards when properly presented as payment from customers for transactions.


26. In view of the preceding paragraphs, the Commission intends to adopt a favourable position concerning the provisions in the notified agreements referred to above. Before doing so, it invites interested third parties to submit their observations within one month of the publication of this notice in the Official Journal of the European Communities. Interested third parties are requested to indicate which passages of their observations contain business secrets or other confidential material, which in their opinion ought not to be divulged, and to state their reasons. In the event of such an indication being made, interested parties are requested to submit both a confidential and a non-confidential version of their observations. These observations should be submitted quoting reference cases COMP/34.324 - Maestro, COMP/34.579 - Eurocard-MasterCard, COMP/35.578 - Europay Membership Rules and Licensing, by post to:

European Commission,

Directorate-General Competition,

Direction D, Unit D1 (Financial Services)

B - 1049 Brussels,

or by fax (32-2) 296 98 07.

(1) OJ 13, 12.2.1962, p. 204/62.

(2) Europay International has informed the Commission that Europay International and MasterCard International are expected to integrate into a new unified shareholder-owned corporation. The integration of the two organisations is expected to be completed in the first quarter of 2002.

(3) MasterCard International is currently a non-profit, non-stock, membership corporation incorporated in the State of Delaware, USA, and the owner and manager of a worldwide payment card system and a travellers cheque system. MasterCard currently holds 12,25 % of the Europay shares. After the completion of the integration of Europay International and MasterCard International (see footnote 2), the new holding company, MasterCard Inc. will hold 100 % of the shares in MasterCard International. All principal members of Europay International will be shareholders in MasterCard Inc.

(4) See paragraph 7 of this notice.

(5) Cross-border issuing is defined as the issuing of cards to cardholders residing in a country other than the country in which the issuing bank is physically established.

(6) Cross-border acquiring is defined as the acquiring of transactions from merchants located in a country other than the country in which the acquiring bank is physically established. It also includes central acquiring.

(7) The Addendum to the exclusive licence agreements, by which these amendments were made, will enter into force in Norway at the latest by 1 May 2002.