EU credit card charges targeted by competition commission.

FRIDAY, APRIL 14, 2006

Fees for transactions on international credit card payments are unfairly increasing retail prices by as much as 2.5% according to the EU’s Competition Commission. For the case of annual credit card fees, credit card owners in some parts of the EU are paying up to double that of other member states.

In an interim ruling, the Commission said that the £935 billion credit card industry in Europe lacked competition and must do more to promote convergence in the internal market. If it’s felt that the credit card companies have abused their dominance of the European market, the Commission can levy substantial fines of up to 10% of annual turnover.

Neelie Kroes, the EU Commissioner, said that she was “fed up” with the credit card companies that were taking advantage of their clients. In 2005, European businesses paid 25 billion euros in fees on international transactions who passed the costs on to consumers. In particular, she singled out Visa and Mastercard, whom she accused them of “abusing” the current situation. She pointed out that a retailer in the UK paid MasterCard a fee that was five times on its credit card than its debit card. Ms Kroes warned the industry that the “paradise days” were over for some credit card companies.

Already reeling from the Office of Fair Trading call for UK lenders to halve their late repayment charges, the banks payment body Apacs said that claims of profiteering were unfounded. The credit card lending industry has 10 weeks to reply to the report.