MasterCard Faces Suit For Overcharging Internet Merchants

by Mike Godfrey, for LawAndTax-News.com, Washington

16 May 2003

Internet payment service provider, Paycom Billing Services has launched an antitrust suit against credit card provider, MasterCard International, it emerged this week.

The $23 million suit, filed on Monday, accuses MasterCard of abusing its dominant market position to overcharge and penalise internet merchants. The billing company, which processes credit and debit card transactins which take place between its clients and online consumers, alleges that:

'MasterCard has established monopolistic rules that allow it unreasonable discretion to dominate Internet merchants, and it has exercised this power to illegally impose fines and penalties in the millions of dollars.'

Speaking earlier this week, CEO of Paycom, Christopher Mallick explained that:

'We are in compliance with MasterCard's rules as a merchant, yet they fine us millions of dollars. Paycom has been directed to change its entire business structure, indeed to change the way in which E-commerce works, to comply with additional rules from MasterCard; rules that MasterCard cannot or will not articulate or explain.'

He continued:

'The intent of this lawsuit is to force MasterCard to treat us and other Internet merchants fairly and to permit us to operate as any other merchant class. This is a business that we built on our ability to accept MasterCard, one of the only currencies available for online shoppers.'

The suit alleges that in using its size and status to discriminate against internet merchants, MasterCard violated several Federal and California State laws including violations of Federal and California State anti-trust laws, denial of fair procedures, unfair competition, fraud, breach of contract and breach of implied covenants of good faith and fair dealing, intentional interference with Paycom's contractual relationships, and intentional and negligent interference with Paycom's prospective business advantage.

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