ACCC sues Mastercard for alleged supply of debit cards

The Australian Competition and Consumer Commission (ACCC) has commenced legal proceedings against Mastercard Australia and Asia Pacific over alleged anti-competitive conduct. 

The ACCC goes into detail in which they believe the card network stifled competition in the supply of debit cards acceptance services. 

The alleged actions of Mastercard stem from late 2017 in response to the Reserve Bank of Australia’s least cost routing initiative. This entailed that Mastercard looked to increase competition in the supply of debit card acceptance services, reducing payments of costs for businesses by allowing them to choose the lowest cost network to process the transaction. 

The ACCC alleges that Mastercard attempted to circumvent the decree by offering cheaper interchange fee rates. This was allegedly passed to more than 20 retail businesses, which includes supermarkets, fast food restaurants and clothing stores. 

“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,” stated Gina Cass-Gottlieb, Chair at ACCC. 

Through the agreements between Mastercard and the retail businesses, the firms agreed that they would not process debit card volumes through the eftpos network despite it being one of the lowest cost providers. 

Cass-Gottlieb added: “We are concerned that Mastercard’s alleged conduct meant that businesses did not receive the full benefit of the increased competition that was intended to flow from the least cost routing initiative.”

The ACCC is now seeking declarations, penalties, costs, and other orders against Mastercard. 

In March 2021, the ACCC accepted a court-enforceable undertaking from Visa in relation to concerns that the card scheme may also have limited competition in relation to debit card acceptance through its dealings with large merchants.