Brussels threat over ‘too high’ credit card fees
Brussels has read the riot act to credit card companies, threatening stiff sanctions for those that continue to gouge consumers through abuse of dominant positions.
Neelie Kroes, the Dutch anti-trust commissioner, issued a scathing rebuke to EU banks and card companies for perpetuating a cosy cartel, with the collusion of governments, in setting payment fees.
Our investigations into the payment cards sector suggest that problems result from anti-competitive behaviour by market players.
Mrs Kroes, known as the "Nickel Lady" for her feisty, free-market views, has already launched a price-fixing probe against Mastercard, which could be a precursor to possible fines.
The European Commission said Mastercard had breached EU law by setting a minimum interbank fee charged to all shoppers, preventing competition.
Mastercard said yesterday that the credit companies bore the costs of customer care and fraud without making any profit from the extra fees, which were withheld by banks.
Payment charges vary by up to 650pc for businesses, and up to 100pc for ordinary consumers across the EU’s 25 states.
The launch of the euro in 1999 has had almost no impact on banking costs and services in the 12 countries of the eurozone, a crushing disappointment to those who hoped that a single currency would smash down the barriers.
Transfers from Portugal and Greece to other eurozone states are still prohibitively expensive, even though they use the same currency.
A three-month probe by the Commission found that banks made some ¬250bn to ¬275bn (?170m to ?190m) in profits each year, helped by disguised barriers and the difficulty of switching banks.
Mrs Kroes said: "Market players place more emphasis on defending and protecting their current market position than they do on seeking to create new opportunities in Europe."
- Source: Brussels threat over ‘too high’ credit card fees, Telegraph, July 18, 2006
