Following last year?s investigation into the credit card market and preliminary findings against MasterCard, Visa and the banks, the European Commission has stood firm in its criticisms of the companies.

In its report on the matter, it is significant that the Commission has now formally stated its concerns that the card companies and banks? fees and fee-setting systems are not vital to the card market place – a claim that has been the mainstay of the credit card companies? arguments.
This could now pave the way for anti-trust action by the Commission if the card companies do not begin to offer fairer and more transparent rates. The Travel Retail Fair Payment Alliance (FPA) says it is now looking with interest to the findings of the next Commission report into MasterCard.
In effect, the European Commission has told the card companies and banks that their fees are too high and they face anti-trust action if the situation doesn?t change. The announcement, made on Wednesday (January 31), heralds a major success for the Travel Retail Fair Payment Alliance (FPA) in its battle to win a fairer framework for credit card charges.
Speaking at the Publication of the final report into the Payment Card Market, Competition Commissioner Neelie Kroes said: ‘?the evidence we found rebuts several of [the card and banking] industry's arguments for the economic benefits of high interchange fees. Card payment networks claim that substantial interchange fees are vital? We have a different opinion…
‘Firstly, the evidence shows that several card networks operate efficiently with low fees, and secondly, customers already pay the cost of interchange fees, since retailers pass them on in higher retail prices, paid not only by card users, but also by customers paying cash. So reducing these fees would, on balance, benefit consumers.
‘Let me make clear our view of these interchange fees. We are not arguing for their abolition. But it is clear that the present level of interchange fees in many of the schemes we have examined does not seem justified?’
Just a matter of weeks before the Commission?s announcement, Poland?s Anti Monopoly Office took a decision that 20 banks participating in setting the separate Visa and MasterCard multilateral interchange fees violated national legislation as the level of fee was not based on objective criteria. In this respect the Anti Monopoly Office ordered the banks involved to discontinue setting Interchange Fees and imposed fines totalling Pln.164m (nearly E.42m).
But according to the Fair Payment Alliance, it wasn?t just the fees that raised concern. It said: ‘Other practices were believed uncompetitive, such as blending of card fees – when a retailer is charged the same merchant fee irrespective of the different costs of card types – and the card companies? ban on surcharging, which prevents retailers from reflecting different levels of card fees in their final prices.
‘Also criticised were acquiring joint ventures, which means retailers have only one offer on the market and cannot shop around.’
Chairman of the Fair Payment Alliance Jacques Parson said: ‘This is a very good start to 2007. Despite strong pressure from the banks and card companies, they found little support at the Commission when they continued to argue their fees are fair and necessary.
‘This has only come about because the Travel Retail FPA worked together to produce clear arguments based on reliable information. We shall watch with great interest to see what steps the Commission will take now in order to act on its own report for the benefit of retailers and our customers…?