Office of Fair Trading rules Mastercard charges are too high

The Office of Fair Trading has ruled that Mastercard and banks issuing its credit cards have been overcharging their customers.

When you use your Mastercard in a bar or a shop, the retailer doesn't get all the money. The banks which process the payments take a slice called the interchange fee. Now the Office of Fair Trading says that fee has been too high and it's not just retailers who have lost out.

Sir John Vickers from the Office of Fair Trading said "They've got to recover that cost; who do they recover it from? The general public as consumers. So the general public as a whole are affected by the level of this fee which has been set collectively by the banks and which we have found to be too high."

With Mastercard handling huge sums, the charges mount up. Last year there were over 700 million Mastercard transactions in the UK with a total value of nearly £43 billion. It is estimated that £500 million was charged in interchange fees.

For 5 years now Britain's shops have been complaining that when we use Mastercard, too much of the money ends up not with them, but with the banks. But the retailers say today's ruling from the Office of Fair Trading doesn't go far enough.

Kevin Hawkins from the British Retail Consortium said "Noone's going to be the slightest bit better off tomorrow. We need much more vigorous action, we need Mastercard to be fined for it's illegal practices up to now and above all we need action to stop this happenning in the future."

Mastercard says the fees were reduced last year. It claims they help pay for things like interest free credit and it is planning an appeal.

John Bushby - Mastercard "The things that we enjoy as cardholders, the interest free period, many of the benefits that we see as cardholders would disappear and I think that's something worth fighting for."

Visa card fees and store cards are also under investigation. As the plastic card industry gets ever bigger its charges are under the spotlight.