Australian regulator sues MasterCard alleging abuse of market power for card payments

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The Australian Competition and Consumer Commission (ACCC) has launched legal action in Federal Court against Mastercard Asia Pacific and Mastercard Australia alleging anti-competitive conduct that significantly reduced competition in the supply of discount card acceptance services.

Consumer watchdog claims between November 2017 and at least November 2020 that Mastercard has a “significant degree of power” in the market to provide credit card acceptance services under the RBA’s Least Cost Guidance Initiative.

The Least Cost Routing initiative aims to give merchants the ability to choose a debit card network that processes contactless dual-network debit card payments – whether Mastercard, Visa or Eftpos – and was intended to increase competition in the supply of debit card acceptance services, while reducing associated payment costs. Processes corporate debit card payments.

For dual network debit card payments, the fees a merchant pays can vary depending on the debit card network used to process the transaction.

The ACCC claims that in response to the Less Cost Routing initiative, Mastercard has entered into agreements with more than 20 major retailers, including supermarkets, fast food chains and clothing retailers, to offer cheaper exchange rates for processing credit card payments if they agree to process debit card transactions from Mastercard-Eftpos is through the Mastercard network, rather than the Eftpos network, although Eftpos has often been a less expensive provider.

“We argue that MasterCard has significant market power to provide credit card acceptance services, and that the primary purpose of MasterCard’s conduct is to impede the competitive process by preventing companies from using Eftpos to process debit transactions,” Gina Kass, ACCC CEO, Gottlieb said.

“We are concerned that Mastercard’s alleged behavior means that companies are not getting the full benefit of the increased competition that was supposed to flow from the lower-cost mentoring initiative.”

ACCC is now seeking advertisements, penalties, costs and other warrants.

“Reducing costs for companies enables them to offer better rates to their customers. Making sure that the major card systems, Mastercard, Visa and Eftpos, compete aggressively is important for both these companies and their customers,” Kass-Gottlib said.

In March 2021, the ACCC accepted a A commitment enforceable to the court from Visa After the company was accused of taking similar actions and offering cheaper exchange rates to some merchants if they agreed to process Visa-branded dual-network debit card payments through the Visa network rather than others, such as Eftpos.

MasterCard isn’t the only financial services company currently in hot water. On Monday, the Australian Securities and Investments Commission (ASIC) said it has begun civil sanction proceedings in Federal Court Against Australia and New Zealand Banking Group (ANZ) to overestimate the amount of money and balances customers have in their credit card accounts, and to charge fees and interest to customers who relied on this information when making withdrawals.

According to the ASIC, the alleged misconduct is the result of “system errors” that misled customers between May 2016 and September 2021, and as of September 2021 into believing that their credit card balance and available funds were in the form of credit, and that the balance would be available for withdrawal without incurring a fee or Benefits.

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