EU ruling on card charges 'a major victory', say retailers

20/12/2007

Retailers have applauded a European ruling to ban the ‘unlawful’ charges levied by MasterCard on cross-border credit and debit card payments.

The European Commission ruled yesterday that so-called ‘interchange fees’, which are charged to both retailers and consumers on card transactions across the borders of EU countries, must be withdrawn.

The Commission found MasterCard’s practice of charging fees on individual credit and debit card transactions to be in breach of EU competition laws.

The British Retail Commission (BRC) has welcomed the ruling, having long petitioned for the fees to be banned. The BRC said that interchange fees are far higher than the actual costs that card firms incur processing transactions.

Kevin Hawkins, director general of the BRC, said: “This has been a long fight for the retail industry. MasterCard has clearly been abusing its position to bolster its bottom line and retailers and their consumers are bearing the cost.”

The Office of Fair Trading (OFT) is currently looking into the fees levied on domestic card transactions, which the BRC believes are similarly anti-competitive.

Peter Robinson, commercial manager for payments at DSG international plc and chair of the BRC’s Payments Working Group, said: “We welcome the approach and firm stance taken by the Commission.

“This decision provides a clear signal to the OFT in the UK that the current practice here is anti-competitive and needs addressing as a matter of urgency. Our customers will benefit as the reduction in operating costs will be reflected in lower prices.”

MasterCard has been ordered to withdraw interchange fees within six months or face daily fines.