Redecard's Internet Processing being Probed

Redecard's Internet Processing being Probed

Posted by John B. Frank Saturday, July 18, 2009

Brazilian antitrust regulators areinvestigating Redecard SA, the local processor of payments forMastercard Inc., after the national internet association saidthe company impeded competition with conditions on onlinepayments. Sao Paulo-based Redecard changed its contracts to requireonline payment systems such as EBay Inc.’s PayPal unit toprovide lists of clients and use its Komerci platform to processtransactions, the antitrust arm of Brazil’s Justice Ministrysaid in an e-mailed statement late yesterday. The antitrust bodybanned the contract changes as a preventive measure, accordingto the statement. Redecard denied any wrongdoing and said it will cooperatewith authorities, according to a regulatory filing.

By Guillermo Parra-Bernal

SAO PAULO, July 17 (Reuters) - The antitrust unit of Brazil's Justice Ministry said it has opened an investigation into credit card operator Redecard (RDCD3.SA), sending the company's shares down 2.56 percent. The Economic Law Secretariat at the Justice Ministry said Redecard would be investigated for imposing terms on online payments that might hamper free competition.

The probe comes as Brazil, Latin America's most populous country, moves to heighten competition in the $190 billion credit card industry, where customers and merchants complain about exorbitant costs and a dearth of options.

The Brazilian Internet Association, an industry guild based in Sao Paulo, asked regulators to investigate whether Redecard modified contractual terms to have online payment processors provide lists of clients. Under the changes, Redecard would require Internet companies to provide a list with their customers and online stores.

As a preventive measure, the secretariat, known as SDE, banned the contractual changes, which were to take effect on Aug. 1. The association said the use of the MasterCard (MA.N) brand by Internet-based companies such as PayPal and Mercado Livre in Brazil would have become more restrictive, keeping consumer fees from falling.

Redecard, which has an exclusive contract with MasterCard, authorizes merchants, issuers and transactions and acts as a clearinghouse.

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