MasterCard has six months to alter its fees for international card transactions or face daily fines following an EU ruling that a retail lobby group says could save European consumers €10 billion a year.

The European Commission ruled that MasterCard's multilateral interchange fee on cross-border payments using MasterCard and Maestro cards violated EU rules on fair competition.

The ruling will also apply to domestic credit card transactions in the Republic and seven other EU states, as the countries peg their rates to that set internationally by MasterCard. It will also affect how domestic card fees are viewed elsewhere in the EU.

MasterCard said it would appeal the decision and had "strong grounds" for a challenge. The firm said its decision to appeal was "based on its firm conviction that market forces, not regulation, should drive . . . the setting of interchange fees".

Interchange fees are charged by a credit card company to a retailer's bank. These fees are then passed on to retailers and ultimately to customers.

Senator Feargal Quinn, president of EuroCommerce, the lobby group which represents six million shops across Europe, estimated that the ruling would benefit European consumers to the value of €10 billion a year. He was unable to estimate how much it would save Irish consumers.

"It will encourage a lot of small retailers to take credit cards. It's a win-win situation for medium-sized enterprises," he said.

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

EuroCommerce, which made a complaint to the European Commission about MasterCard's fees, said consumers will enjoy lower prices. "At this stage it only applies to cross-border payments but . . . every consumer in every country will demand their governments institute the same steps in weeks," said Mr Quinn.

Una Dillon, head of card services for the Irish Payment Services Organisation, said: "The impact on the Irish industry won't take effect for quite a while if there is any effect at all."