A European ruling that the charges levied by MasterCard on retailers for cross-border credit and debit card transactions are unlawful, has been hailed as a major victory by the British Retail Consortium (BRC).
The BRC has been lobbying against ‘interchange fees’, arguing they are much higher than the actual costs that card firms incur in processing transactions and so are an unjustifiable tax on retailers and consumers.
The European Commission ruled today, that MasterCard’s practice of charging the fee on individual credit and debit card transactions breaches EU competition laws. MasterCard has been ordered to withdraw the fees within six months or face daily fines.
This European-level ruling affects charges levied on transactions across the borders of EU countries. In the UK, the Office of Fair trading (OFT) is currently investigating fees levied on domestic card transactions. The BRC says today’s European ruling should send a clear signal to the OFT that current practice in the UK is also anti-competitive.
BRC Director General Kevin Hawkins said “We applaud the Commission’s decision to put an end to this unfair tax on consumers. 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 customers are bearing the cost.”