(BRUSSELS) - EU antitrust regulators ordered payments card giant MasterCard on Wednesday to scrap fees they consider unjustified on cross-border transactions or face hefty daily fines.

Although the company promised to comply with the order from the European Commission, MasterCard also said that it would file an appeal with an EU court in hope of getting it overturned.

The European Union's top competition watchdog threatened to impose daily fines equal to 3.5 percent of MasterCard's daily global turnover if the company fails to withdraw the so-called interchange fees in six months.

MasterCard currently collects the fees, which can range from 0.4 percent to 1.2 percent of a purchase's value, each time consumers make a payment at a retail outlet with MasterCard or Maestro branded credit and debit cards.

"Multilateral interchange fee agreements such as MasterCard's inflate the cost of card acceptance by retailers," Competition Commissioner Neelie Kroes said.

"Consumers foot the bill as they risk paying twice for payment cards: once through annual fees to their bank and a second time through inflated retail prices paid not only by card users but also by customers paying cash," she added.

MasterCard Europe president Javier Perez said: "We are disappointed that ... the Commission failed to appreciate that without a mechanism to fairly share costs among all the participants in a payment system ... consumers will be hurt."

The company controls about 45 percent of the European payments card market and about 85 percent of businesses accepting such cards in Europe will take Mastercard.

According to the Commission, consumers make over 23 billion payments each year with their cards, with a value greater than 1.35 trillion euros (1.94 trillion dollars).

In a separate case, the Commission allowed in 2002 MasterCard's arch-rival Visa to maintain interchange fees until the end of 2007.

But Kroes said that after the end of the year the Commission would reopen the case to see if Visa's fees were in line with EU rules.

"They are aware of our policy. We will be active and will not wait for them to tell us if they are in compliance," the Dutch commissioner told journalists.

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