UK regulator the Office of Fair Trading
(OFT) is expanding its inquiry into interchange fees in the UK to
include immediate debit cards. The OFT is already investigating
MasterCard’s and Visa’s current UK interchange fee arrangements
relating to consumer and commercial credit cards, charge cards and
deferred debit cards. The news comes after the recent European
Commission probe into retail banking and card payments.

In a statement, the OFT said: “The expansion of this investigation
is consistent with the scope of the European Commission’s current
investigation into MasterCard’s European intra-regional interchange
fees. In conducting the new investigation the OFT will seek
information from card issuers and other parties as it considers

The OFT has been investigating interchange fee arrangements in the
UK since 2000, and has described them as “a tax on UK consumers”.
In September 2005, the OFT said that fees charged by MasterCard
were anti-competitive and that they forced up retail prices. In
October of that year, it began an investigation into Visa’s
interchange fees.

The OFT’s move is the latest in a series of clampdowns within the
UK card market. In April 2006, the OFT ruled that credit card
default charges were unfair and forced UK credit card issuers to
lower them to £12 ($23) or less.

MasterCard responded by saying it found the OFT’s announcement
“surprising and disappointing”, given that a previous OFT ruling on
MasterCard’s historic interchange fees, made in September 2005, was
subsequently overturned at the UK Competition Appeals Tribunal in

In a statement, MasterCard said: “As it is the case for credit
cards, interchange fees play a vital role in debit card schemes
such as Maestro by allocating the costs of operating the payment
service in a transparent manner among all participants. We will
continue to co-operate fully with the OFT while rigorously
defending our position with regards to interchange fees and the way
they are established.” 

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