MasterCard to appeal OFT ruling on interchange fees

MasterCard to appeal OFT ruling on interchange fees

MasterCard says it will appeal against a ruling by the Office of Fair Trading (OFT) that interchange fees charged by its UK members infringe competition rules.

The OFT says it has found that a collective agreement between the MasterCard UK Members Forum (MMF) setting the interchange fee on almost all purchases between March 2000 and November 2004 restricted competition.

John Vickers, OFT chairman, says: "The parties to this collective agreement set the interchange fee to derive revenues from retailers and their customers over and above the costs of providing the payment services.

"This unduly high interchange fee was like a tax on UK consumers."

The OFT says consumers, including those who do not use MasterCard cards, ultimately picked up the cost for the higher interchange fee through higher retail prices.

In a statement, MasterCard says it strongly disagrees with the OFT findings and will appeal the decision.

John Bushby, general manager, MasterCard Northern Europe, says: "For the OFT to claim that the interchange fee agreement either reduced competition or disadvantaged consumers or retailers is simply wrong. Consumers benefit from greater choice as more retailers accept credit cards, and retailers of all sizes benefit as card usage expands."

Bushby says the ruling also fails to recognise that interchange fees have contributed to expansion in the use of new technology and a more secure means of payment.

The OFT has been investigating MasterCard's fees since 2000 and the latest ruling confirms preliminary findings announced last November, when the OFT also launched a probe into interchange fees charged by Visa members.

MasterCard says it is confident that the OFT's decision will ultimately be reversed.

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