MasterCard faces fee charges - 2005-10-28 - Shanghai Daily
EUROPEAN regulators may accuse MasterCard International Inc, the world's second-biggest credit card company, of overcharging retailers for cross-border transactions, people involved in the investigation said.
The allegations by the European Commission, the Brussels-based antitrust regulator of the European Union, follow a warning two years ago that MasterCard may be engaging in anti-competitive practices that violate EU laws.
Britain's Office of Fair Trading said in September that a fee agreement between card issuers and banks that collect payments from stores restricted competition. MasterCard said the ruling may have a "significant adverse impact" on its business. European transactions for the New York-based company rose 14 percent to US$83.2 billion in the second quarter.
"Companies say that these rulings affect their revenues because transaction costs don't go away and they need new ways to get their revenue back," said Richard Rolfe, editor of the European Card Review in England, a magazine covering the credit-card industry.
MasterCard isn't aware of any new EU accusations, said Louise Herbert, a company spokeswoman. "We're waiting to hear more from the European Commission," she said.
Jonathan Todd, a commission spokesman, said "the inquiry is ongoing." At issue in the EU probe are fees that banks in the MasterCard system charge each other to process cross-border transactions, said the people, who declined to be identified.
The so-called interchange fees are passed on to retailers and represent the merchants' largest cost in accepting MasterCard payments.
MasterCard doesn't disclose the size of the fees, which is unfair to both the retailers and potential competitors, the EU said two years ago.
Visa, the world's largest credit-card company, agreed in 2002 to cap and cut retailers' fees for cross-border transactions by 2007, settling a European antitrust probe.
[Source: Shanghai Daily; Bloomberg]
