|
|
|
NEWS STORY
END OF CARD CHARGE PLAN GOOD NEWS
|
| August 24, 2007 |
|
Sustained pressure from the British Retail Consortium (BRC) and its members has lead to the withdrawal of plans for a costly new approach to debit card charging. That is good news for customers and retailers.
The BRC is welcoming MasterCard's announcement that it is giving up attempts to implement a drastically different way of charging with the launch of its new Debit MasterCard.
In the UK retailers currently pay a fixed fee on debit card transactions regardless of the value of the transaction. Rates range from 6 pence to 18 pence depending on which card it is and where and how the transaction occurs but the fee on a £20 transaction is the same as for a £100 transaction.
For this new debit card MasterCard wanted to introduce percentage, or so-called ad valorem, fees. It wanted to charge a fixed fee of 3.5 pence plus 0.15 per cent of the purchase price. This would have been the first time this charging system had been used on debit cards in the UK. Retailers feared it would lead to sharply increased costs which would ultimately have to be recouped from customers
It would have meant higher card charges on any item priced above about £20.
BRC Director General Kevin Hawkins said: "The withdrawal of MasterCard's planned charging scheme is a victory for retailers and customers. Opposing ad valorem or percentage card charges is a point of principle for retailers of all sizes. They feared this would have opened the door to wider use of this formula for bumping up card companies' revenues. Higher costs would put the squeeze on retailers and ultimately filter through to customers.
"Card companies' administration costs are no greater for large transactions than small ones so there can be no justification for higher charges. And why should retailers of larger items be disproportionately penalised?
"Debit card fees have been steadily rising anyway. With UK and EU competition authority investigations continuing, card companies can see the writing on the wall for their huge fees. Some will suspect this was simply another tactical ploy to recoup lost revenue."
Notes to editors
The fee MasterCard will charge retailers for transactions made with its new Debit MasterCard has yet to be announced but it will not be linked to the value of the transaction.
The fees charged by MasterCard and Visa in the UK are currently the subject of an Office of Fair Trading investigation. The fees they charge on cross-border transactions are currently being investigated at EU level by the Competition Directorate General.
Media Contacts
Richard Dodd, BRC Press Office
020 7854 8924
07921 605544
|
|
 back
|
|
|
