New inquiry into Mastercard fees

New inquiry into Mastercard fees

The competition watchdog launched a second investigation today into fees MasterCard and the major banks charge for using their credit cards.

The Office of Fair Trading (OFT) said revised fees introduced by the group and the MasterCard Members Forum (MMF) may still be set too high.

It said MasterCard and the MMF could be setting fees to recoup costs associated with other things, such as the interest-free period offered on credit cards.

Last September the OFT announced that a collective agreement between MasterCard and MMF breached competition law, claiming the fees amounted to "a tax on consumers".

But before the OFT reported its findings in September last year, MasterCard introduced new fees, which came into force on November 18 2004. The investigation launched today will look into those new charges.

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The issue relates to the so-called interchange fee, levied on most purchases made using a MasterCard as a percentage of the transaction, and which the retailer making the sale ultimately pays.

But the OFT said these fees could be passed on to consumers, including those who did not use cards issued by MasterCard, through higher prices in shops.

The OFT said today that it had "reasonable grounds" to suspect that the new fees infringed competition law.

John Busby, senior vice president for MasterCard Europe, said he was "unsurprised" by the announcement as the OFT's review of interchange fees was still underway.

"MasterCard notes that the OFT has announced that, at this stage, it is merely seeking further information. In line with its consistent practice, MasterCard will actively cooperate with the OFT and comply with its requests for information as it has consistently done so."

The OFT is also currently investigating Visa's interchange fees and has issued a statement of objections, although Visa has been given until after the MasterCard appeal has ended to respond.

Guardian Unlimited © Guardian Newspapers Limited 2005