GRTU, the Malta Chamber of Small and Medium Enterprises, as member of EuroCommerce and in support of FIRAE, has voiced publicly its concerns on the lack of effective action by the Maltese authorities to challenge the excessive charges being imposed by credit card firms and banks on retailers and consumers. The GRTU believes that the action being taken in Malta falls seriously short of what is being done by other Member States, regulatory authorities, and the action being taken by the European Commission.

GRTU's director general, Vince Farrugia, said that he had presented formal complaints on the situation in Malta to the parliamentary secretary at the Ministry of Finance, Dr Tonio Fenech, to the chairman of Malta Financial Services Authority (MFSA) Prof. Joe Bannister, to the Central Bank and to the head of the fair competition Dr Mireille Vella.

Dr Fenech confirmed today that a report has been finalised by MFSA on all charges levied by local commercial banks and that this report is being studied for any action that is necessary to address current problems. Dr Fenech also assured the GRTU that specific action will be taken on the credit card charges issue.

Mr Farrugia explained that consumers increasingly prefer paying by cards and that shop owners must provide this option to consumers if they want to stay competitive. At the same time however they cannot discriminate in prices between customers paying in cash or plastic so the cost is transferred on both. This however was followed by the question: "Are consumers aware that whether they use a credit card or not, they pay a hidden fee on every transaction made?" Data shows that the use of cards in Malta and Maltese issued cards between 2002 and 2006 has doubled.

Mr Farrugia outlined the various ways GRTU feels thst consumers and retailers are being secretly extortioned from the two main credit card firms, VISA and MasterCard, which bring the excuse that their fees simply cover transaction costs. A 2006 report however found that only 13% of the fees go toward these processing costs, with the rest going to bank profits, expensive advertising campaigns and rewards. This level of profitability was described by European Competition Commissioner Neelie Kroes as "outrageous."

These fees are called Multilateral Interchange Fees (MIF) and are decided by Visa or MasterCard or by the banks hiding behind them - all without input by retailers or shoppers, and often without their knowledge. As a result of this fee, shops actually receive less than the full price paid by the cardholder. The GRTU believes that consumers and retailers have the right to be informed about these fees. In addition, Mr Farrugia contested that the Maltese government continues to aggravate the situation by imposing a LM 7.00 charge to all card holders. The GRTU is advocating the government to eliminate this as it contributes to the unjust charges card holders are charges, of which they have already paid enough.

Mr Farrugia stated that this issue must be taken very seriously because it is having severe consequences on our economy. The average European household pays �139 per year on interchange fees alone. This is the reason why the GRTU is strongly urging the Maltese authorities to take a stand against these anti-competitive practices. Unless constraints are imposed by regulators, payment card companies and their banks can increase interchange rates at any time by any amount.

GRTU also outlined the launch of the new Single European Payments Area (SEPA) in 2008, from the side of the European Union, as an important step in the right direction. Vince Farrugia however warned that this new scheme might actually lead to higher prices if it is not set up properly with the right regulatory control. This risk comes about because banks may use SEPA as an occasion to abandon the relatively low-cost national debit card schemes and move to MasterCard or Visa's pan-European debit card systems based on more costly and anti-competitive interchange fees.

GRTU pointed out that competition authorities and regulators in Australia, New Zealand, the US, Italy, the Netherlands, Spain, the UK and others are looking into the anti-competitive practices of payment card companies. With countries such as Poland not only demanded that costs by credit card firms would be reduced to real costs but also imposed a �42m in fines on the 20 banks, and required Visa and MasterCard to put an end to their anti-competitive practices starting with the abolition of interchange fees by all banks. GRTU demands to see similar strict action taken by the Maltese authorities.

Vince Farrugia explained that it is very timely for GRTU to voice this issue as the European Commission ruled strongly against these charges. It ruled that the fee had to become cost-based. Any increase had to reflect a real increase in the costs faced by the operating banks. Retailers had to be allowed to ask banks to reveal the costs of the cost categories covered by the multilateral interchange fee system. In addition, the level of the weighted average cross-border interchange fee was capped per transaction. In line with this, Malta being a Member State, must put the same effort as in other Member States to combat this unfair situation. This so that Maltese consumers and retailers are not put at a disadvantage when compared to the other Member States.

Hence, GRTU demands change in the legislation on payment card charges and wants to see the competent authorities take concrete actions against this unfair situation. The Maltese authorities must honour their obligations, in the same way other Member States have done, in protecting consumers and retailers from the overcharging by the credit companies and banks. These changes must be done now, before the Euro Changeover takes place, so as to facilitate the process.

Full background information may be found on the GRTU's website at www.grtu.org....mt