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Industry issues

The UK Cards Association manages a range of activities and campaigns on behalf of our membership. Below you will find our point of view on key industry issues and topics:

Internet safety — helping to stop child pornography
Interchange fees — the unintended consequences of regulation

Internet Safety — Helping to Stop Child Pornography

Card companies continue to take a hard line against online child abuse, campaigning to ensure that no UK company profits from child pornography on the Internet. Our members ensure that businesses are subject to tough checks before they are able to accept card payments online and they continue to make ongoing checks after businesses have been accepted.

Acquiring banks undertake a number of security checks prior to recruiting a merchant and, where they believe that the merchant is involved in illegal activity, they will not sign up that merchant. Checks remain ongoing after a merchant has been set up to accept card payments and if a merchant is found to be offering illegal material for purchase by payment card, the acquiring bank will terminate its agreement with the merchant and report the matter to the police.

The UK Cards Association funds the Internet Watch Foundation (IWF) to support its activities in fighting illegal sites on the Internet. The industry has worked closely with the Home Office to develop working relationships with the IWF and the Children's Charities Coalition for Internet Safety. In addition the industry is an active participant on the Home Office's Child Protection Task Force.

Interchange Fees — The Unintended Consequences of Regulation

An Overview of the Issue

Interchange fees have been subject to regulatory scrutiny for some years, both in the UK and across Europe. Recent developments are explained below:

In December 2007, the European Commission concluded its investigation into MasterCard’s multi-lateral cross-border interchange fees, ruling their current arrangements to be illegal. Whilst the Commission have not said that interchange fees are illegal per se, they have said that MasterCard did not “make their case”. MasterCard are appealing this decision.
In March 2008, the Commission announced it was opening formal proceedings against Visa Europe’s multi-lateral cross-border interchange fees. This followed the expiry of an agreement between Visa and the Commission, reached in 2002, that has already led to a reduction in Visa’s cross-border interchange fees.

The Commission is encouraging domestic regulators, such as the OFT, to follow its lead and it is assumed that each interchange fee will be looked at on its own merits. Interchange fees are at the heart of the success of the UK card payments market and have served the UK economy well. Such fees are the product of market forces and the only example of regulation, in Australia, shows that the consequences of regulatory intervention can be unpredictable.

Such intervention domestically would, in our view, be an experiment on a mass scale with one of the most competitive, efficient and ubiquitous services used by consumers and merchants in the UK.

It is vital that business, consumer groups, government and regulators fully understand the significant impact that regulation could have.

Both the European Commission and retailers make a number of specific claims about interchange fees. They claim to be acting in consumers’ best interests. We believe that these arguments are flawed.

The Australian example provides a real and tangible example of how a market responds to this type of intervention. It shows what the outcomes of regulation could be if existing sensitive market dynamics are disrupted.

Further discussion on interchange fees is available here>>