§ Mr. RiddickTo ask the Secretary of State for Trade and Industry when he will lay orders implementing the recommendations of the Monopolies and Mergers Commission report on credit card services in the United Kingdom.
§ Mr. RedwoodI made the Credit Card (Price Discrimination) Order and the Credit Card (Merchant Acquisition) Order yesterday and have laid them today.
On 13 March this year I announced that we had decided to proceed to statutory consultation preliminary to the making of orders under section 56 of the Fair Trading Act.
That consultation is complete and I am today laying the orders to implement our decisions on the MMC report on credit card services. Traders will no longer have to charge cash customers the same price as those paying by credit card. This should lead to a fairer deal for the majority of shoppers. The orders should also allow more banks and financial institutions to come into the credit card business and thereby enhance competition.
The MMC in its report made two recommendations applicable to credit card services:
—the "no discrimination" rule, under which traders are required to charge the same price for purchases made with credit cards as those paid for by cash or other means, should not apply within the UK;—certain rules restricting the freedom of issuers of Visa and Mastercard cards to act as merchant acquirers, should not apply within the UK.The Credit Cards (Price Discrimination) Order requires that the credit card companies' "no discrimination" rules be abolished before 7 March 1991 and allows traders to price differentially by that date, if the trader so wishes, on purchases made with credit cards or certain cards not readily distinguishable from credit cards.
Credit card companies will be free if they feel it appropriate to limit traders' price differentials to a maximum of the charge levied on the trader by the merchant acquirer for credit card use—this is currently less than 2 per cent, on average.
The Credit Cards (Merchant Acquisition) Order makes it unlawful, subject to certain exceptions, for payment card organisations to prevent any person authorised by them to carry on business as a payment card issuer from acting as a merchant acquirer for that organisation's cards once the person commences to carry on business as a credit card issuer. Payment card organisations may not require payment cards to be issued before an authorised person may act as an acquirer.
In addition to these orders, we are preparing regulations to be made under the Consumer Protection Act 1987, and for petrol, an order under the Prices Act 1974 to ensure that any differential pricing is clearly indicated to the consumer. It is intended that these will 777W come into force at the same time as the order requiring the abolition of the "no discrimination" rules on 28 February 1991, subject to consideration of comments made in the course of consultation.
In the expectation that these orders will further open the credit card market and bring the benefits anticipated by the MMC from increased competition I have decided not at this time to bring forward a further order to require mechant acquirers to publish certain information on their charges and to submit information to the Director General of Fair Trading. We will watch with the DGFT developments in competition in the credit card market, particularly in the light of the two orders I am laying today, and will consider the position again if necessary.