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MasterCard must pay Sainsbury millions, others waiting in line

Staff Writer |
MasterCard was ordered to pay UK supermarket chain J Sainsbury 68.6 million pounds ($90.8 million) because fees it passed on to the grocer were too high.

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A number of UK retailers have sued card issuers such as MasterCard with similar claims.

The lawsuit concerned interchange fees that are charged when credit or debit cards are used. The lawsuit alleged that the default fees set up by MasterCard were too high.

The London judge agreed, writing that merchants have little options except to accept cards from all card issuers, leaving MasterCard with the power to set unilateral rates that are higher than they would otherwise be if MasterCard had negotiated.

The judge wrote that a merchant who considered the default rate too high would be left with "unattractive alternatives" such as complaining, refusing to accept cards and charging card users a surcharge.

The judge ruled that credit-card transactions should have had a fee of 0.5%, rather than 0.9%, and debit-card transactions should have had a fee of 0.27%, rather than 0.36%, and calculated the damages based on the difference in rates.

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