Visa, MasterCard and competition

Visa and MasterCard have come under fire in the US because it is claimed they are “illegally eliminating competition between each other and blocking rival American Express”, according to the Sydney Morning Herald today.

While there has not been any similar allegation made in Australia, it would appear that the Australian Competition and Consumer Commission might look into the matter should there be pressure placed on Visa and MasterCard in the US.

The Australian Consumers Association believes that interest and fees on credit cards are too high, and would welcome any moves that would reduce these.

It is interesting to note that interest rates on home loans have dropped by around 3% since June 1996 while credit card rates have fallen by 1.4%. When these figures are worked out as a percentage of the rate then the credit card rate fall looks even smaller.

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