CANADIAN COMPETITION BUREAU’S DECISION TO CHALLENGE MASTERCARD’S NO SURCHARGE AND HONOUR ALL CARDS RULES WOULD HURT CONSUMERS
TORONTO, December 15, 2010 – MasterCard Canada said today that the Canadian Competition Bureau's challenge of MasterCard Canada's rules, including its no surcharge rule, which prohibits merchants from charging customers extra when they pay with MasterCard credit cards, and its honour all cards rule, which prevents merchants from discriminating against different types of MasterCard credit cards, would, if successful, have negative consequences for Canadian consumers. The company believes that the Competition Bureau's legal claims are without merit and will ultimately be rejected by the Competition Tribunal. "If these changes were implemented by the Competition Bureau, the result would be to enrich merchants at the expense of consumers," said Betty DeVita, President, MasterCard Canada.
MasterCard Canada's prohibition against credit card surcharging is a rule that protects consumers. It applies to Canadian merchants that accept MasterCard credit cards and protects consumers by preventing merchants from imposing an additional fee on consumers who choose to pay with a MasterCard card. The rule has been in place in Canada for more than 35 years.
Australia provides an excellent example of how surcharging harms consumers. Since the Reserve Bank of Australia allowed surcharging in 2003, there has been increasing and unjustified surcharging of consumers by certain merchants. In the U.S., credit card surcharges are banned in 10 states, including New York, California, Florida and Texas. The practice is also outlawed in 17 European Union Member States, including France, Spain, Germany, Austria and Sweden.
Under MasterCard Canada's rules, merchants are free to offer discounts or other inducements to customers who pay by cash, debit or any other means as a way to reduce their costs of credit card acceptance. MasterCard Canada is of the view that this gives merchants the pricing flexibility they require, while protecting consumers from the negative consequences of surcharging. These include practices that have been observed in Australia, including "bait and switch" pricing tactics and price-gouging.
MasterCard Canada's honour all cards rule prevents merchants from picking and choosing which MasterCard credit cards they will accept. If the Bureau were successful in challenging this rule, it would mean that consumers would not know if their MasterCard credit cards would be accepted until they attempted to make a purchase, even though the merchant displayed the MasterCard acceptance logo. This could undermine consumers' confidence in, and their ability to use, MasterCard cards as a form of payment. No jurisdiction in the world has banned the honour all cards rule.
MasterCard Canada intends to defend its no surcharge and honour all cards rules in the proceeding before the Competition Tribunal and looks forward to demonstrating how its rules benefit both consumers and merchants in Canada. The Competition Bureau does not seek any penalty or damages from MasterCard.
Canada's credit card industry helps facilitate more than $240 billion in commerce annually for Canadian merchants, big and small. Merchants pay a relatively small fee for participating in the credit card system. In return for this fee, merchants enjoy significant value, including increased sales, guaranteed, secure and nearly immediate payments, and access to millions of Canadian and hundreds of million U.S. and other cardholders both in-store and online.
MasterCard Canada believes merchants should pay their fair share of the cost of credit cards, and should not be able to pass on these costs to consumers through higher prices.
About MasterCard Worldwide
As a leading global payments company, MasterCard Worldwide prides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2009, $2.5 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 22 billion transactions each year, has the capacity to handle 140 million transactions per hour, with an average network response time of 140 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard®, Maestro®, and Cirrus®; its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass™ and MasterCard inControl™. MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at www.mastercard.com. Follow us on Twitter: @mastercardnews.
Statements in this press release which are not historical facts, including statements about MasterCard's plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company's ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Such forward-looking statements include, without limitation, statements related to: (1) the likelihood that the Canadian Competition Bureau's challenge of MasterCard's rules, if successful, would have negative consequences for Canadian consumers; (2) the possibility that the Canadian experience with surcharging would track the experience in Australia; and (3) the likelihood that the legal claims underlying the Canadian Competition Bureau's challenge will ultimately be rejected by the Competition Tribunal.
Actual results may differ materially from such forward-looking statements for a number of reasons, including those set forth in the company's filings with the Securities and Exchange Commission (SEC), including the company's Annual Report on Form 10-K for the year ended December 31, 2009, the company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2010, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company's results to differ materially from expected results.
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