Mastercard fees protest

At the end of October 2008, British retailers protested to Europe's top competition regulator, alleging that Mastercard had "significantly" increased the cost of using its branded debit and credit cards and that this would mean price rises for consumers.

By Andrew Chandler

In December 2007, the Commission made an infringement decision concerning MasterCard's cross-border interchange fees. Nellie Kroes recognised then that "Multilateral interchange fee agreements such as MasterCard's inflate the cost of card acceptance by retailers." MasterCard's increase of cross-border interchange fees gives the BRC even more grounds to argue that these fees inflate retailers costs - an argument it will no doubt press with the OFT.

MasterCard has increased these fees at the same time as it is appealing the Commission's infringement decision in the European Courts. This indicates its willingness to play hard ball on the issue of interchange fees and shows that Mastercard will not be pressured into reducing these fees any time soon. But this is potentially a high risk strategy - increasing cross-border interchange fees might make it more difficult for MasterCard to argue that they can be justified in terms of competition law and could ultimately undermine its appeal case.