UPDATE 1-EU court adviser supports crackdown on MasterCard fees
* Setback for MasterCard in fight to keep cross-border card fees
* Court's legal adviser recommends dismissal of appeal
* Opinion may bolster EU regulatory clampdown
LUXEMBOURG, Jan 30 (Reuters) - MasterCard suffered a blow on Thursday in a five-year fight against an EU ban on cross-border card fees, as an adviser to Europe's top court backed regulators' efforts to cut card costs.
The legal opinion follows a European Commission ruling that said MasterCard's cross-border multilateral interchange (MIF) fee - on retailers' credit and debit card transactions - violated antitrust rules and had to be changed.
The crackdown is part of the Commission's push to boost e-commerce in the 28-country European Union and reduce costs for business - though MasterCard fears cutting the fees will discourage banks from issuing its cards.
"I propose that the court should dismiss the main appeal (by MasterCard) and the cross-appeals," Advocate General Paolo Mengozzi at the EU Court of Justice said in his opinion.
His recommendation signals how the final ruling may look. The court, which will issue its ruling in the coming months, follows such advice in the majority of cases.
The opinion may also bolster proposed draft rules to cap charges on card payments that have yet to be approved by EU countries and the bloc's parliament.
It is a setback to the world's second-largest credit and debit-card company, which has said such interference would lead to higher costs for consumers and encourage the black economy.
MasterCard faces increasing competition from rival payment schemes such as eBay's PayPal.
Interchange fees are collected and kept by banks processing payments using cards. While MasterCard does not benefit directly from the charge, it has an interest in keeping them.
It has said that the value of cross-border card transactions is less than 5 percent of all purchases made by cardholders.
A lower court threw out MasterCard's challenge in 2012.
MasterCard settled part of its dispute with the Commission in 2009 and agreed to reduce its debit card charges to 0.20 percent of a transaction and to 0.30 percent for credit cards, pending the court ruling.