Monday 24th August 2009 |
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MasterCard International has followed in rival credit card issuer Visa in reaching a settlement with the Commerce Commission over the practice of `smearing’ credit card fees across transactions.
MasterCard signed an agreement on the fees charged to cover banks’ costs of credit card transactions, known as interchange fees, on “substantially the same basis as the Commission’s settlement with Visa,” the regulator announced today. Still, the settlement will cost the issuer $3 million to be put toward the regulator’s court costs, that’s more than the $2.6 million Visa had to pay. Neither issuer admitted liability or to an act of wrongdoing.
Like Visa, MasterCard will alter the way its scheme rules apply in New Zealand, giving vendors more flexibility to set a surcharge on credit card payments, and issuers the ability to set interchange fees. Interchange fees have routinely been spread across all methods of payment, including cash and EFTPOS.
“The commission is pleased that MasterCard has agreed to settle the commission’s claims on the same basis as Visa,” said chairman Mark Berry in a statement. The decision will “ensure that costs of credit card use fall to a greater extent on the card users themselves, who can make informed choices about payment methods, and less on other consumers.”
The regulator said the settlements won’t have any bearing on the other claims against the banks using the Visa and MasterCard schemes, nor on Warehouse Financial Services Ltd. in relation to MasterCard’s interchange fee rules.
ANZ National Bank, Bank of New Zealand, Westpac Banking Corp, ASB, KiwiBank and TSB Banking, along with Warehouse Financial Services, will be heard in the High Court in Auckland in October. In 2007, the competition watchdog took action against a number of banks and other related parties over interchange fees, accusing them of fixing prices for the charges in 2004.
Credit card transactions for that year were some $19 billion. It later dropped charges against HSBC finding it had limited involvement and after the other defendants agreed.
The Commission never alleged collusion between MasterCard and Visa. Visa was praised by Berry after it approached the regulator to broach a resolution to the issue earlier this month.
Businesswire.co.nz
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