PARIS (Reuters) - Mastercard and Visa have agreed to cut the fees to process credit card transactions in France by almost half.

The French Competition Authority announced the agreement with Visa and Mastercard in the wake of proposed legislation from the European Commission that banks and payment firms limit the fees they charge on card payments.

Card companies have waged a 20-year battle with the EU's executive, which enforces antitrust rules in the 28-country bloc.

A spokeswoman for the French regulator said that its remit was transactions within France, rather than the cross-border European transactions that are governed by the EU's regulator.

Both Visa and Mastercard will cut interbank fees to around 0.28 percent of the transaction value from about 0.5 percent currently, and will also reduce cash-machine fees to 0.55 euros ($0.74) per withdrawal from 0.75 and 0.60 respectively, the competition authority said in a statement.

The agreement also comes after several moves by the French watchdog to cut bank customers' fees in France. French banks agreed in 2011 to cut interbank card fees by more than a third and last year they pledged to cut fees charged for direct-debit bill payments.

The watchdog has in the past criticised French banks for charging some of the highest interbank fees in Europe.

A Visa Europe spokesman declined to comment. Mastercard did not immediately respond to a request for comment.

(Reporting by Lionel Laurent; Editing by Greg Mahlich)