LONDON (Reuters) -Mastercard is among five companies which broke the law for cartel behaviour when offering pre-paid cards to vulnerable members of society, Britain’s Payment Systems Regulator said on Wednesday.
Mastercard, allpay, APS, PFS and Sulion agreed not to compete or poach each other’s customers on cards used by local authorities for welfare payments including to the homeless, victims of domestic violence and asylum seekers, the PSR said.
The investigation is ongoing and the companies can make representations on the provisional findings, the PSR said.
Mastercard, allpay and PFS have admitted liability and if the regulator ultimately concludes there is wrongdoing have agreed to pay maximum fines totalling more than 32 million pounds ($44 million), the watchdog said.
The PSR alleges two infringements of Britain’s 1998 competition law.
One breach took place over six years between 2012 and 2018 and involved all five firms, the PSR said.
The other lasted between 2014 and 2016 and involved APS and FPS, the watchdog said.
“Pre-paid card services, like these, can provide significant benefits to local authorities as one way to make welfare payments to some of the most vulnerable people in society,” said Chris Hemsley, managing director of the PSR.
“By colluding in this way, we consider the parties were acting as a cartel… Collusion in payments is absolutely unacceptable. Where we see it happening, we will take action, stop it, and seek to impose significant penalties.”
Mastercard said it took the issue very seriously and had put further controls and training in place, adding the incident was isolated to UK prepaid cards.
“We apologise that the actions of two former employees resulted in the standards expected of us not being met in this instance,” a Mastercard spokesman said.
PFS said it would make an announcement in due course.
Allpay and APS were not immediately available for comment. Sulion could not be reached.
LONDON (Reuters) – Mastercard, a global payment processor, is battling attempts to add about 14 million deceased people to a 14 billion pound ($19.3 billion) British class action in an effort to limit the scope of the historic case.
A Mastercard lawyer told London’s Competition Appeal Tribunal (CAT) on Friday that an application seeking to add those who died between 1992 and 2008 into the country’s first mass consumer claim, that alleges the company overcharged people over a near 16-year period, was a “nullity”.
“A claim cannot be brought in the name of a deceased person,” Mark Hoskins, representing Mastercard, said at the hearing.
Former financial ombudsman Walter Merricks, who is leading the claim, alleges that Mastercard overcharged almost 60 million people in Britain – including about 14 million people who are deceased – over the period. The case could entitle adults and their estates to roughly 300 pounds each if successful.
Hoskins said attempts to add new parties to the “very serious claim” — or their administrators, personal representatives, executors or next of kin — was also now time-barred. The company is also resisting attempts to add compound interest to the claim.
The drawn-out case was brought in 2016, one year after the CAT was nominated to oversee Britain’s U.S.-style “opt-out” class action regime for breaches of UK or EU competition law.
The CAT blocked the case in 2017 but is re-considering authorising it as a collective action and determining its scope — and establishing a standard for a string of other, stalled class actions — after the UK Supreme Court in December allowed the action to proceed.
Merricks, who is being advised by law firm Quinn Emanuel, alleges Mastercard charged excessive “interchange” fees – the fees retailers pay credit card companies when consumers use a card to shop – between May 1992 and June 2008 and that those fees were passed on to consumers as retailers raised prices.
Mastercard says it “fundamentally disagrees” with the claim, that people received valuable benefits from its payments technology and that the lawsuit is driven by U.S. lawyers and backed by organisations focused on making money for themselves.
LONDON (Reuters) – A specialist London court will this week re-consider allowing a historic 14 billion pound ($19 billion) class action against Mastercard to proceed, which could entitle adults in Britain to about 300 pounds each if successful.
Former financial ombudsman Walter Merricks, who alleges that Mastercard overcharged more than 46 million people in Britain over nearly 16 years, hopes the Competition Appeal Tribunal (CAT) will certify the case after the UK Supreme Court overruled objections to it proceeding in December.
A two-day court hearing will kick off on Thursday and will determine the fate of Britain’s first mass consumer claim — and clarify the rules for a string of other competition class actions that have stalled in its wake.
Merricks, who is being advised by U.S.-headquartered law firm Quinn Emanuel, alleges Mastercard charged excessive “interchange” fees – the fees retailers pay credit card companies when consumers use a card to shop – between May 1992 and June 2008 and that those fees were passed on to consumers as retailers raised prices.
Mastercard says the claim should not be brought, that people received valuable benefits from its payments technology and that the lawsuit is driven by U.S. lawyers and backed by organisations focused on making money for themselves.
“We fundamentally disagree with this claim…,” it said.
THE DECEASED, COMPOUND INTEREST IN FOCUS
Legal arguments this week are expected to revolve in part around whether estates of the deceased should have a claim and whether compound interest should accrue, which are “significant” for the ultimate size of the claim, Mastercard says.
The case was filed in 2016, one year after the CAT was nominated to oversee Britain’s U.S.-style “opt-out” class action regime for breaches of UK or EU competition law — and 12 years after the European Commission ruled that Mastercard had charged unlawful cross-border interchange fees over the period.
In such cases, UK-based members of a defined group are automatically bound into legal action unless they opt out.
But the CAT blocked the lawsuit in 2017 because it thought it unsuitable for collective proceedings, triggering drawn-out appeals and causing a bottleneck for other class actions.
If the case proceeds, Merricks is expected to need to prove that Mastercard’s domestic fees were illegal — and to quantify the costs passed on to consumers.
Litigation funder Innsworth Capital has stumped up 60.1 million pounds to cover the legal costs of the case, including 15 million pounds for Mastercard’s legal costs if the claim fails. It will be paid from any unclaimed damages awarded, after agreement from the CAT.
Typically, take-up by claimants is low in such claims. The U.S. Federal Trade Commission found in 2019 that only about 9% made a claim after successful consumer class actions.
Mastercard and MTN today announced a strategic partnership to enable millions of consumers in 16 countries across Africa to make global e-commerce payments safely and securely.
Through a Mastercard virtual payment solution linked to MTN MoMo (Mobile Money) wallets, consumers and merchants can engage with brands and businesses abroad through digital commerce, extending their reach to an international marketplace and unlocking a host of opportunities.
Partnership will enable millions of MTN customers to pay on global online platforms with a Mastercard virtual payment solution linked to MTN MoMo wallet
Mastercard’s technology will enable new digital commerce opportunities for consumers and merchants with or without a bank account, through a simple and secure payment experience
Collaboration underpins a new wave of financial inclusion through mobile devices, unlocking opportunities for millions of people across Africa
Across Sub-Saharan Africa, mobile devices are the primary channel used to connect to the internet. According to GSMA, by 2025, it is estimated that there will be 300 million more people using their devices to access internet services. In light of this significant growth, mobile financial services have become the dominant form of digital payments, with twice as many mobile money accounts as bank accounts in the region. As a result, consumers increasingly expect to have access to a broader range of digital financial services.
However, consumers and merchants are mostly restricted to a local base of online and offline businesses, therefore curtailing customers’ ability to engage in global commerce. Through this strategic partnership, MTN customers with a Mastercard virtual payment solution linked to their MoMo wallets can make payments to global online merchants through a seamless and secure digital payment experience on websites and mobile applications. The service is available regardless of whether or not the customer has a bank account.
The solution will enable consumers to explore and shop at well-known global e-commerce brands and pay quickly and securely for leisure shopping, travel, accommodation, entertainment, streaming services and more. It will also allow small business owners to purchase from suppliers abroad and pay with the virtual payment solution.
“We are very excited about this partnership with Mastercard, which is another step in realizing our ambition to build Africa’s largest fintech platform, accelerating economic and social development through digital innovation to the benefit of citizens across the continent and beyond,” said MTN Group Chief Digital and Fintech Officer Serigne Dioum.
“This noteworthy partnership is another step to enable our customers to participate in the global economy. We are resolute that accelerated financial inclusion is a potent enabler of socio-economic development that empowers the most vulnerable in society,” he concluded.
Amnah Ajmal, Executive Vice President for Market Development, Mastercard Middle East and Africa, said: “This significant milestone will enable millions of MTN customers to benefit from global digital commerce and drive digital and financial inclusion across Africa through easy and secure access to financial services.
“At Mastercard, our innovation strategy is based on partnerships and collaboration. This agreement with MTN shows that we can deliver innovative digital solutions that have a far-reaching impact and realize the true potential of inclusive growth across the continent. Partnering with MTN allows us to accelerate our global pledge to connect 1 billion people to the digital economy by 2025, bringing us closer to a world beyond cash.”
MTN and Mastercard first launched the digital payment solution in 2018 for MoMo customers. MTN, the largest mobile network operator, is the ‘Most Admired African Brand’ based on spontaneous consumer responses in Brand Africa 100: Africa’s Best Brands 2020 survey and the most valuable telecoms brand in Africa by Brand Finance Africa.
The company will extend the virtual payment solution offering throughout its Fintech footprint. The expansion of this payment solution will play a significant role in driving the growth of digital inclusion and e-commerce thus increasing MTN MoMo customer inclusion into the global economy.
Initially designed to facilitate the transfer of cash between mobile users, MTN’s MoMo offering is now much broader – including loans, insurance, remittances and payments.
Credit card giant Mastercard is to raise the fees it charges merchants when UK cardholders buy goods and services from the EU by fivefold.
It has sparked fears that consumer prices could rise if merchants choose to pass on those costs, especially on items not available from UK retailers.
Transactions with airlines, hotels, car rentals and holiday firms based in the EU could all be affected.
Mastercard attributed the move to the UK’s decision to leave the EU.
It added that “in practice” UK consumers would not notice the move.
The change affects the “interchange” fees Mastercard sets on behalf of big banks, so that its customers can use their payment networks.
From October, Mastercard said it would increase these fees to 1.5% on every transaction, up from 0.3%.
The EU introduced a cap on such fees in 2015 after concerns they pushed prices up for consumers and unfairly burdened companies with hidden costs.But Mastercard said that since the end of the Brexit transition period, the cap no longer applied to many payments between the UK and European Economic Area (which also includes Iceland, Liechtenstein and Norway).
It said its new policy was in line with a deal it made with the EU on fees for purchases from outside the EEA.
“As a result of the UK leaving the EEA, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European Commission in 2019 for non-EEA card transactions,” the company said.
“In practice, only EEA merchants making e-commerce sales to UK cardholders will see a change.”
Kevin Hollinrake, chair of the parliamentary group on Fair Business Banking, told the Financial Times, which first reported the story, that the move “smacks of opportunism”.
And Callum Godwin, chief economist at CMSPI, the global payments consultancy, said airlines, hotels, car rentals and travel groups would be hit.
“[This will happen] anywhere the consumer is in the UK and the merchant is in the EU,” he said.
He added that many firms in these industries were already struggling due to the pandemic.
Visa, Mastercard’s larger rival, has not announced plans to change its fees but told the FT it was keeping the issue under review. Companies in the UK and EU are already facing added costs and delays due to post-Brexit trade rules brought in on 1 January.