Australian Watchdog Sues Mastercard for Allegedly Misusing Card Payment Market Power

The Australian Competition and Consumer Commission (ACCC) has started legal proceedings in the Federal Court against Mastercard Asia Pacific and Mastercard Australia for alleged anti-competitive conduct that substantially lessened competition in the supply of debit card acceptance services. From a report: The consumer watchdog alleges between November 2017 to at least November 2020 that Mastercard had a "substantial degree of power" in the market for the supply of credit card acceptance services under the Reserve Bank of Australia's (RBA) least-cost routing initiative. The least-cost routing initiative aimed to give merchants the ability to choose which debit card network processed their contactless dual-network debit card payments -- whether that was Mastercard, Visa, or Eftpos -- and was intended to increase competition in the supply of debit card acceptance services, while reduce payments costs associated with processing debit card payments for businesses.

For dual-network debit card payments, the fees paid by a merchant can vary depending on the debit card network used for processing the transaction. The ACCC alleges that in response the least-cost routing initiative, Mastercard entered into agreements with more than 20 major retailers, including supermarkets, fast food chains, and clothing retailers, to offer cheaper interchange rates for processing credit card payments if they agreed to process Mastercard-Eftpos debit card transactions through the Mastercard network, rather than the Eftpos network, even though Eftpos was often the lowest cost provider.

Re:This is what you get when you vote Labour

[Falconhell]

We are very happy to have thrown out the right wing corrupt bastards, it what you get when gerrymanders and a useless electoral system like the US has are not used.
Having states manage federal elections is a recipe for disaster.
The ability to gerrymander is a disgrace on your country, and destroys any claim to democratic equality. We all know republicunts cannot win without cheating
We have an independent electoral commission that has the full support of our population, and our elections are all done on paper, and scrutinised by both independent and party checkers. With the exception of a very small minority of far right sore losers, everyone respects the fairness of the way our elections are run.
Take you primitive faux democracy shithole and Rand and shove them firmly up your ass.

Re:

[thegarbz]

Two things:
a) Of course there is such a thing as "anti-competitive behaviour". It is not only defined in law, but is also well published in economics and commerce literature.
b) Australia didn't vote Labour. We also didn't vote Labor (the actual spelling of the party), the election was one of the most brutal rejections of major parties since Liberal National Coalition was stood up making Australia an effective 2 party system.

If you want to spout bullshit at least get your bullshit right and say this is what

Re:

[mjwx]

Yes, this and other benefits are what we get for voting Labor. (In Australia the party uses the American spelling). Other benefits include, besides a party that cares about the issues affecting ordinary Australians, a Federal commission into corruption (which the LNP is just going to love as they lurch every further to the right).

Thanks, editors...

[Entrope]

[...] to offer cheaper interchange rates for processing credit card payments if they agreed to process Mastercard-Eftpos debit card transactions through the Mastercard network, rather than the Eftpos network, even though Eftpos was often the lowest cost provider.

Would it have killed anyone to explain the difference between "cheaper interchange rates" and "lowest cost provider" for those of us who are not experts on point-of-sake payment networks?

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[fazig]

The way it's phrased doesn't make much sense to me either.
From the article:

The least-cost routing initiative aimed to give merchants the ability to choose which debit card network processed their contactless dual-network debit card payments -- whether that was Mastercard, Visa, or Eftpos -- and was intended to increase competition in the supply of debit card acceptance services, while reduce payments costs associated with processing debit card payments for businesses.

Sounds to me that the merchants did m

Re:

[bloodhawk]

The problem is MC used their dominance and pricing in another market to offer a discount if the retailers took up their more expensive EFTPOS transactions. As the creditcard transactions are probably their dominate transactions now the retailer saves money by going for MC's more expensive EFTPOS as the credit card ones now get a discount. So the retailer is being pushed to their EFTPOS even though it is more expensive.

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[fazig]

I understand that much that they use their creditcard dominance to establish a debitcard dominance against networks that offer lower cost debit transfers.
That is anti-competitive practice in my eyes.

However the wording is weird within this context. If the merchants are given the ability to "choose" the network for debit transfers, they must choose the least-cost network for debit transfers? But that wouldn't be much of a choice then, or would it?

Or maybe the "choice" is only valid based on a certain se

Re:Thanks, editors...

[Anonymous Coward]

The least cost routing is designed to drive market competition and choice for the retailers with no more lockin and overinflated pricing as the retailers can switch anytime they wish (I helped write one system for a company where it is literally setup to switch on a daily basis to take advantage of whoever is offering the best pricing on the day). MC are in effect trying to bypass that with an underhanded deal to lock in the provider and displace others.

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[vivian]

This is a perfect example of why you need regulation of financial systems and it's great to see that it is working as intended.

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[Anonymous Coward]

credit cards and EFTPOS are separate providers. MC is effectively using it strength in one market to displace other providers in the second market. It is a shit act which no EFTPOS provider can counter as they are already cheaper than MC but lose the deal as MC are providing a discount in a separate market to take the deal.

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[jrumney]

The issue here is that Mastercard and Visa have a duopoly on contactless payments. In order to get cheaper rates on contactless payments, the retailers are having to agree to put all transactions on dual standard cards (most banks in Australia issue bank cards which use the banks' own EFTPOS standard as well as either Mastercard or Visa debit), even if they are made by inserting the card rather than contactless. EFTPOS IIRC charges a low fixed rate per transaction, something that got it widespread accepta

Re:

[mjwx]

[...] to offer cheaper interchange rates for processing credit card payments if they agreed to process Mastercard-Eftpos debit card transactions through the Mastercard network, rather than the Eftpos network, even though Eftpos was often the lowest cost provider.

Would it have killed anyone to explain the difference between "cheaper interchange rates" and "lowest cost provider" for those of us who are not experts on point-of-sake payment networks?

Well, yes, it would have.

In Australia you select which network you want to send the transaction down. "Savings" or "Sav" on point of sale (POS) terminals uses the EFTPOS network (Electronic Funds Transfer Point Of Sale) which is a low cost network administered by the Australian Payments Clearing Association, a consortium backed by payment service providers (banks basically) that was around long before Visa or Mastercard became widespread. It remains the cheapest way to perform any card based POS operati

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[Entrope]

I am sorry for the quokkas but very happy to have your clear explanation of what this is about. Thank you!

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[bloodhawk]

That isn't quite right, the choice of payment network is not up to the individual it is up to the retailer. when you press Savings it will usually go via EFTPOS as that is the cheaper option for the retailer, but it is entirely their choice not yours as to which payment system they use, it doesn't cost you any extra either way. On the credit side it obviously has to be credit provider. So the customer never had any choice beyond credit or debit and the ACCC lawsuit is over how it screws the providers which

The problem is?

[Anonymous Coward]

Mastercard entered into agreements with more than 20 major retailers, including supermarkets, fast food chains, and clothing retailers, to offer cheaper interchange rates for processing credit card payments

Who's getting screwed?

if they agreed to process Mastercard-Eftpos debit card transactions through the Mastercard network, rather than the Eftpos network, even though Eftpos was often the lowest cost provider.

Was Mastercard offering cheaper rates or not? It seems like these retailers are also at fault as well if they're going along with this, why not name them?

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[Anonymous Coward]

The eftpos providers are getting screwed. basically mastercard were offering discounts to the retailers on the credit card side in order to displace and take the eftpos marketshare.

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[Strauss]

Key words "credit" and "debit"

Mastercard was offering cheaper credit transactions, if-and-only-if the retailer also used Mastercard for debit transactions, even though the Eftpos debit transactions were cheaper still.

Or;
I'll give you my apples cheap, if you also buy my more-expensive-than-the-competition oranges.

Re:

[igreaterthanu]

Rewards cards aren't so common in Australia, and you can get about as much as 0.5 - 0.75% cash back equivalent in rewards, or less on government transactions.

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[gravewax]

It is poorly worded, however their are 2 separate markets, one for debit, one for credit. EFTPOS providers are handling the debit and are getting screwed. It is the old OEM lockin deal, give us 100% of your business if you want the best price on 90% (credit) of what you buy from us. Thus displacing the 10%(debit) without having to compete with them on price.

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[thegarbz]

It seems like these retailers are also at fault as well if they're going along with this

This would be the same as saying that Google's anticompetitive lock-in to their search engine if you wanted to ship the Play Store was the direct fault of Samsung for wanting to ship a phone with the Play Store on it.

No retailers are not at fault for accepting terms that are industrially anti-competitive. The fact that retailers are often left very little choice in the matter is precisely the reason anti-trust laws exist. The ACCC rarely brings a case under anti-trust regulations unless it's quite sure it c