Click here to read entire (Jan 28) article by Reuter’s Huw Jones.
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Click here to read entire (Jan 28) article by Reuter’s Huw Jones.
Want to know more about lead plaintiff ScanMyPhotos.com? Click here and read their daily blog: Tales from the World of Photo Scanning
[Businesswire, Dec 19] The National Retail Federation today welcomed a ruling by the European Commission that hidden fees currently charged by MasterCard to process credit card transactions in Europe – similar to those that cost U.S. shoppers $40 billion annually – drive up costs for consumers in violation of EC rules and must be withdrawn within six months.
“European authorities say MasterCard is double dipping in Europe, and that’s exactly what we think both MasterCard and Visa are doing here in the U.S.,” NRF Senior Vice President and General Counsel Mallory Duncan said. “Visa and MasterCard are charging billions of dollars directly to consumers for all the fees that show up on their monthly statements, then they turn around and charge billions more from the hidden credit card fees they force merchants to include in the price of merchandise.”
“These fees drive up the cost of merchandise for shoppers while delivering little if any benefit commensurate with the billions charged,” Duncan said. “It’s time for this to stop, and authorities here in the United States should take the European ruling as a signal that it’s time to bring the same relief to U.S. consumers.”
The European Commission ruled today that so-called “interchange” fees charged by MasterCard and its banks violate EC Treaty rules on restrictive business practices and “inflated the cost of card acceptance by retailers without leading to proven efficiencies.” The commission ordered MasterCard to withdraw the fees within six months or face fines equivalent to 3.5 percent of global revenues.
The commission said the fees are “not illegal as such” and stopped short of saying MasterCard could not charge any interchange fee at all. But any replacement system of fees, even if lower, would be allowed under EC rules only if MasterCard could show that it “contributes to technical and economic progress and benefits consumers.”
EC Competition Commissioner Neelie Kroes said the fees drive up costs for consumers as well as retailers.
“Consumers foot the bill as they risk paying twice for payment cards: once through annual fees to their bank and a second time through inflated retail prices,” Kroes said in releasing the ruling. “The commission will accept these fees only where they are clearly fostering innovation to the benefit of all users.”
Averaging close to 2 percent in the United States, interchange is a fee Visa and MasterCard banks charge merchants every time a credit card or signature debit card is used to pay for a transaction. Visa and MasterCard collected more than $36 billion in interchange fees last year, up 17 percent from 2005 and 117 percent since 2001. This year, the amount is expected to top $40 billion, or about $350 per household. Interchange is largely unknown to most consumers because Visa and MasterCard don’t disclose the fee on monthly statements and prohibit merchants from disclosing it on receipts.
MasterCard interchange rates for cross-border transactions in Europe currently range from 0.8 percent to 1.2 percent of each transaction. Visa was not addressed in today’s ruling but reached an agreement with the EC in 2002 that restricts its fees – previously averaging 1.1 percent – to a maximum of 0.7 percent. That agreement ends at the end of 2007, and the EC said today that beginning in 2008 Visa will be “responsible to ensure that its system is in full compliance with EU competition rules.”
NRF is leading retailers’ fight against soaring interchange costs in the United States, and Duncan testified before the House Judiciary Committee’s Antitrust Task Force in July that collusion between banks when setting the fees has violated U.S. antitrust law. The hearing was the second time Congress has looked at interchange practices in the past two years following a Senate Judiciary hearing on possible antitrust violations in July 2006. In addition, approximately 50 federal antitrust lawsuits against Visa, MasterCard and their member banks have been consolidated in U.S. District Court in New York and are awaiting action.
The National Retail Federation is the world’s largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry’s key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees – about one in five American workers – and 2006 sales of $4.7 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. http://www.nrf.com
According to The Financial Times (Dec 18), ” Mastercard is widely expected to launch an appeal if, as expected, the European Commission finds that its interchange fees on cross-border payments breach competition rules in a decision due to be announced on Wednesday.”
Click here to view entire article.
According to Thompson Financial News (Dec 14) [click here to read article], next week the European Commission will rule that MasterCard’s charges are illegal and violated the law. According to the report, “[t]he commission has longed feared that interchange fees, set at around 1 per cent per purchase, paid by retailers’ banks to card-issuing banks, are being abused to collect the highest rate of return.” Interchange rates for the identical services in the U.S. are nearly double the charges in Europe.
[Source, via Thompson Financial]
EU Antitrust Chief Warns That New Bank Payment System Should Not Cost Customers More. The EU’s antitrust chief Neelie Kroes warned banks on Monday that a new payment system should not be allowed to cut down choice or increase costs for customers.
Regulators have criticized the high level of these fees, saying card networks like Visa, MasterCard and American Express have failed to explain why they need to charge so much for handling payments.
Click here to read article.
[via AP]
According to Reuters, the expected EU proposals for interchange fees has been delayed. It was to be released any day, but will now occur within the next few weeks, or perhaps not until next year. We hope this was not caused by Visa’s planned IPO. Could you imagine if the offering took place prior to this important ruling – investors would be denied the opportunity to fully understand its impact. From our U.S. prospective, can you imagine the anguish from European merchants and consumers who are forced to pay upwards of 1.0% in merchant fees? Then again, the rates in the U.S. are 70% higher than that, which raises the reoccurring question of why have the member banks and card associations been able to (as we assert) illegally fix prices and artificially charge such sky-high rates?
[Commentary: WayTooHigh.com, via Reuters report]