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Mastercard fees add to small firms' woes
Archived article dated Thursday October 23rd 2008
As MasterCard increases its 'membership' charges by as much as 161 per cent and introduces a new 'development' charge, the British Retail Consortium (BRC) is warning that small firms could be pushed over the edge and prices elsewhere forced up.
The BRC is today (Thursday) writing to MasterCard to express its serious concern that, as the world economy falters, MasterCard's dramatic fee increases and new charge can only undermine hard-pressed customers and businesses.
Its cross border interchange fees have already been ruled unlawful by the European Commission and its domestic interchange charges are under threat from a pending OFT ruling. As the BRC feared, MasterCard is making up for lost revenue by contriving a new 'development' fee and increasing its card scheme costs - the so called 'membership'fees.
The three MasterCard fees are:
* The interchange fee: paid by the retailer to the bank issuing the payment card.
* The 'membership' fee: non-negotiable and paid by the card issuer to MasterCard to be part of its scheme - the cost is then passed onto the retailer.
* Premium Development fee: totally new charge introduced with no explanation.
MasterCard's 'membership' fee increases will rise:
* Domestic fees by 161%
* EU cross-border transactions within the Eurozone by 78%
* EU cross-border transactions outside the Eurozone by 25%
The increased fees and new charge could add up to £15 million a year in costs on all MasterCard transactions in the UK, which will ultimately be passed onto customers and so increase inflation. For small retailers, already battered by a range of rising costs, this could be the extra burden that drives them out of business.
In the letter to MasterCard, BRC Director General Stephen Robertson says, at a time of extreme instability for all industries, low levels of consumer and business confidence are impacting particularly hard on retailers. Both the UK Government and Opposition are looking at ways of bolstering the health of small businesses. MasterCard lowering its already high interchange fees would be a good start.
Stephen Robertson, BRC Director General, said: "MasterCard's fee increases and new charge are another slap in the face for hard-pressed customers and retailers, especially smaller businesses. At a time when the UK economy is teetering on the edge of recession, we should all being doing our bit to help rather than exploiting opportunities to bolster profits.
"After its cross border interchange fees were ruled unlawful by the EU and with its domestic interchange costs under threat from a pending OFT ruling, MasterCard has craftily introduced a new fee to make up for lost revenue while also ramping up its non-negotiable membership fees. MasterCard must publicly provide a full justification for its charges."
Tagged as: brc | mastercard |
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