The Australian Competition and Consumer Commission (ACCC) on Monday launched a lawsuit before the Federal Court against Mastercard for allegedly stifling competition in providing debit card acceptance services.
The Protector of Consumers stated in a statement that he has initiated proceedings against Mastercard Asia / Pacific Pte Ltd and Mastercard Asia / Pacific (Australia) Pti Ltd.
Allegedly, Mastercard’s anti-competitive behavior began in late 2017 in the context of the Reserve Bank of Australia’s “lowest cost targeting” initiative, which aimed to increase competition in debit card acceptance services and reduce payment costs for businesses by allowing them to choose the cheapest network for processing their transactions.
This has allowed companies to choose whether their debit transactions will be processed via Visa, Mastercard or eftpos, with eftpos being often the cheapest option.
“We claim that Mastercard had significant market power to provide credit card acceptance services and that the essential purpose of Mastercard’s conduct was to hinder the competitive process by discouraging companies from using eftpos to process debit transactions,” said ACCC President Gina. Cass-Gottlieb.
In response to the “lowest cost routing” initiative, Mastercard reportedly signed contracts with more than 20 large retail companies, including supermarkets, fast food chains and clothing retailers.
The contracts gave these companies reduced rates for Mastercard credit card transactions, provided they undertake to process all or most of their Mastercard-eftpos debit card transactions through Mastercard, not the eftpos network, the consumer supervisor said.
This meant that these companies would not process significant amounts of debit cards through the eftpos network even though eftpos was often the cheapest provider.
“We are concerned that the alleged behavior of Mastercard meant that companies did not fully benefit from the increased competition that should have resulted from the lowest-cost routing initiative,” said Kas-Gottlieb.
The ACCC investigated allegations that Mastercard participated in anti-competitive behavior by offering certain large merchants lower exchange rates (known as ‘strategic trading rates’) to process credit card payments if they agreed to process Mastercard-eftpos debit card payments over the Mastercard network. .
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(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is automatically generated from the syndicated feed.)
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