OFT widens card fee inquiry to debt cards
by Elaine Frei
The Office of Fair Trading (OFT) will look into how and how much banks charge retailers to process debit card transactions. The investigation is a widening of an inquiry of several years’ standing into the way credit card interchange fees are charged. The new investigation means that the OFT is now looking at nearly all ways that banks make their money.
The inquiry into debit card fees is welcomed by retailers. A representative of the British Retail Consortium said that the raising of fees to merchants is not justified. He said that with the larger proportion of purchases made with debit cards, retailers “have no choice but to accept” Visa and Mastercard debit cards, and no choice but to pay the fees banks charge for such transactions.
In its continuing investigation into fees for credit cards, the OFT last year called such fees anti-competitive and said they were essentially a tax on consumers. Also in 2005, the OFT required UK banks to cut repayment default charges on credit cards. The European Commission is also investigating the fees charged to retailers by Mastercard.
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