Sir - Matt Barrett, the Barclays
chief executive, is right to admit (News,
Oct 17) that he does not borrow on credit cards because it is
I helped prepare the arguments for Barclays in 1981 when credit
cards were first subjected to the public scrutiny of the
Monopolies and Mergers Commission. There was also a second inquiry
in 1989. On both occasions, the MMC concluded there was no case
for interfering with interest rate pricing.
The industry is still subject to the classic cross-subsidisation
without which plastic card technology could not have developed.
The cost of the benefit of international use is not borne equally;
the cost of the benefit of the free credit period is not borne
equally; and since the last MMC inquiry introduced the 1990 Price
Discrimination Order, the cost of the benefit to retailers has not
been borne equally.
The result, though, is that consumers have a convenient and
flexible method of shopping, and retailers have a secure low-cost
money transmission system. Moreover, the extensive competition
that now exists was unimaginable more than 20 years ago, when we
made our original submissions. I find it surprising, after all
this time, that some cardholders still insist on using a product
designed for optimum convenience as their preferred line of
long-term credit, when there are so many cheaper options
Mr Barrett is not "doing a Ratner". He is stating a fact
that has been patently obvious since day one. In 1966, Barclaycard
was launched with the slogan: Barclaycard Makes Shopping Simpler.
It did then. It does now.
Mike Allott, Eastleigh, Hants