Mastercard is set to lower its charges on purchases after the European Commission threatened to slap them with a fine.
The warning followed an investigation by the European Commission which showed excessive charges on part of the credit card company.
The move should bring down consumer prices and costs for retailers across the EU, including Malta.
Under pressure from the European Commission, Master-card decided to bring cross-border Multilateral Interchange Fees (MIFs) on credit card transactions down to 0.3 per cent from the current range of 0.8 to 1.9 per cent.
On the Maestro network of debit card transactions, Mastercard has agreed to cut charges to 0.20 per cent from the current range of 0.40 per cent to above 0.75 per cent. These measures will enter into force as of July 2009.
Welcoming the move, Brussels said it decided not to go ahead with the legal procedure started against the company in 2007.
"Assuming these commit-ments are kept, I see no further need to pursue Mastercard for infringing the antitrust rules," Competition Commissioner Neelie Kroes said.
At the same time, the move is now expected to put pressure on the company's main rival, Visa to also lower its charges, even though they are already lower than those of Mastercard.
MIFs are interbank payments made for each transaction carried out with a consumer card.
Retailers are charged for the fee which in turn is levied on the goods sold, irrespective of whether they are bought with a card or not.
According to the Commission, in the EU, over 23 billion payments are made every year with payment cards, exceeding €1.35 billion in value.
However, the European Commission only has the power to intervene on cross-border transactions, which occur for example when tourists use their cards in Malta or vice-versa, and this represents only some five per cent of total MIFs.
Both the Commission and the GRTU in Malta have been asking both card companies to lower their charges on national transactions.
However this has not been done so far.
The use of credit cards in Malta is widespread.
According to CPP Italia, a research agency specialising in the use of credit cards, Malta ranks fourth among EU states for the amount of use that is made of credit cards.