In a landmark decision, the Office of Fair Trading (OFT) has slammed credit card provider MasterCard for overcharging customers.
The OFT said that MasterCard overcharged customers by £42.7 billion on over 700 million purchase transactions in the UK in 2004.
According to the OFT, interchange fees, charged as a percentage of total transaction value, were to blame.
Sir John Vickers, OFT Chairman, said: “The parties to this collective agreement set the interchange fee to derive revenues from retailers and their customers over and above the costs of providing the payment services. This unduly high interchange fee was like a tax on UK consumers.”
MasterCard said yesterday: “For the OFT to claim that the interchange fee agreement either reduced competition or disadvantaged consumers or retailers is simply wrong.”
Phil Evans, competition expert at Which?, told the Financial Times (FT) that the ruling didn’t go far enough: “If there was a way they could pump this up to the Competition Commission and have a full market investigation, that would be a lot cleaner and more conclusive.”
© Adfero Ltd