EU Credit card ruling is "early Christmas present"
Posted on 20 December 2007 by
A European ruling that could see the prices of goods and services drop in the UK has been described as "an early Christmas present".
The European Commissioner for Competition ruled yesterday that additional fees charged by MasterCard when consumers use their credit cards abroad led to an unfair inflation in retailers' costs.
Retailers say that the fees, which range from 0.4% to 1.2% of the transaction value, have to be passed on to consumers through higher prices.
Although the ruling only applies to the use of cards abroad, Commissioner Neelie Kroes called on national regulators to follow her decision. The Office of Fair Trading is currently examining the fees levied on credit card users, and is likely to consider the ruling carefully.
The British Retail Consortium described the ruling as a "major victory". Director-general Kevin Hawkins said: "The sooner MasterCard accepts this ruling the sooner customers will benefit from these cost reductions.
"We are now urging the Commission to ensure card companies do not try to wriggle round the effect of the decision by pushing up other charges or introducing new ones."
MasterCard has said that it intends to appeal against the decision. MasterCard Europe president Javier Perez said: "Far from providing clarity, [Wednesday's] decision leaves MasterCard Europe and the entire payments industry in doubt as to what interchange fees the Commission will allow.
"We are disappointed that... the Commission failed to appreciate that without a mechanism to fairly share costs among all the participants in a payment system... consumers will be hurt."
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