21 June 2006
The Office of Fair Trading (OFT) has announced it is to start an investigation into the legality of credit card interchange fees.
It also believes that collectively agreed interchange fees from Mastercard and Visa could be in violation of competition law.
Interchange fees are charged on every transaction completed using a credit card.
Although it is initially paid by the bank of the retailer involved, the cost is passed on to the retailer, which then passes it on to consumers in the form of higher prices meaning that all consumers end up having to pay more.
"We still believe that collectively agreed interchange fees go against the principles and letter of competition law and are harmful to consumers, who see higher prices as a result of these fees," said John Fingleton, chief executive of the OFT.
"It's in the best interests of consumers and businesses to see this problem addressed quickly through focussing on current fees, rather than historic ones. Not only does this new approach tackle the consumer detriment issues, but it also gives clarity and certainty to Visa and Mastercard."
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