MasterCard appeals to consumers over interchange ruling

20 December 2007

MasterCard has stepped up its campaign against the European Commission's rulings on interchange charges by warning consumers not to expect lower prices when they shop if the fees are scrapped.

The EC yesterday gave MasterCard six months to scrap the non-negotiable interchange fees it charges for cross-border transactions or face daily penalties.

 

MasterCard, which has promised to appeal the ruling to the European Court of First Instance, cautions that if this decision were adopted across the EU, consumers "will more likely see the benefits they have come to expect when they use their credit and debit cards fade away, as happened to consumers in Australia when the government there imposed regulations on what had been a successful free market".

 

MasterCard argues that costs currently borne by merchants under the interchange regime will ultimately be passed on to consumers if the fees are scrapped.

 

Looking to Australia, where interchange was regulated five years ago, MasterCard claims cardholders are now paying almost AUS$1 billion more as a result of increased fees, such as a resurgence of annual fees, and decreased features and benefits, like airline mileage programs.

 

"There's no evidence that merchants lowered prices to reflect the lower interchange payments - and there's little reason European consumers should expect them to do so here," states the card scheme.

© finextra