Australian Competition & Consumer Commission sues Mastercard over alleged misuse of card payments


Created: June 10th 2022

The ACCC has launched a proceeding against Mastercard Asia/Pacific Pte Ltd and Mastercard Asia/Pacific (Australia) Pty Ltd in Australia’s Federal Court in an allegation of “engaging in conduct to substantially lessen competition in the supply of debit card acceptance services”.

The alleged anti-competitive occurred in 2017 in the context of the Reserve Bank of Australia’s least-cost routing initiative. Under that, the RBA aimed to increase competition in the supply of debit card acceptance services and reduce payment costs for businesses by allowing them to choose the lowest cost network to process their transactions.

This lets the businesses choose debit transactions to be processed through Visa, Mastercard, or Electronic funds transfer at point of sale (EFTPOS), with EFTPOS often being the cheapest option.

But the ACCC has alleged that to this response, Mastercard entered into an agreement with 20 major retail businesses which included supermarkets, food and clothing chains under which the agreement meant that the businesses were given discounted rates for Mastercard credit card transactions, provided they committed to processing all or most of their Mastercard-EFTPOS debit card transactions through Mastercard rather than the EFTPOS network.

“We allege that Mastercard had substantial power in the market for the supply of credit card acceptance services and that a substantial purpose of Mastercard’s conduct was to hinder the competitive process by deterring businesses from using EFTPOS for processing debit transactions,” ACCC Chair Gina Cass-Gottlieb said.

Under this suing process, the ACCC has noted that it is seeking declarations, penalties, costs, and other orders.

The primary allegation is that this practice led to Mastercard engaging in anti-competitive conduct by offering certain large merchants cheaper interchange rates by diverting credit card payments if businesses agreed to process Mastercard-EFTPOS debit card payments through the Mastercard network.

Card giants are coming under increasing regulatory pressure. In the UK, NatWest Group bank was fined for overcharging on interchange fees while last year, the Bank of England noted that Interchange fees are a “regressive tax” on SMEs.

On interchange fees last year, Amazon UK stopped accepting Visa credit cards and further Amazon backed down on the UK Visa credit card ban and reached a global truce on card fees.

Source: Mastercard in court for alleged misuse of market power over card payments | ACCC