Brussels, 14/06/2013 (Agence Europe) - On 13 June 2013, the European Commission opened a consultation of interested parties on the commitments offered by Visa Europe to remedy the Commission's concerns about potential restrictions of competition through the levying by Visa of multilateral interchange fees (MIFs) for credit card payments (see EUROPE 10667).
Interchange fees are charged by a cardholder's bank (the “issuing bank”) to a merchant's bank (the “acquiring bank”) for each sales transaction made at a merchant outlet with a payment card. Interchange fees are either agreed bilaterally, between one issuing and one acquiring bank, or multilaterally, by a number of issuing/acquiring banks or by means of a decision binding all banks participating in a payment card scheme. The industry refers to these multilateral interchange fees as “MIFs". A MIF can be a percentage, a flat fee or a combined fee (percentage and flat fee). MIFs are a substantial part of the total cost to retailers for credit card payments and force them to raise their base rates to the detriment of consumers. The Commission says that the MIFs charged by Visa Europe for credit cards create an uneven playing field among acquiring banks and increase consumer costs and that the rules on “cross-border acquiring” in the Vusa system restrict the possibility for retailers to benefit from better conditions (lower charges) by using banks in other member states.
To remedy these concerns, Visa has offered to reduce its MIFs by 40% to 60% to 0.3% of the transaction value, which Mastercard has already pledged to do. It has also offered to change its purchase rules so that banks can levy either the domestic rate or a reduced cross-border interchange fee for bot debit and credit transactions when they compete for clients in other countries. This should considerably reduce the charges for retailers and thus, ultimately, for consumers. The commitments would apply for four years from 1 January 2015 onwards.
If at the end of the consultation process the Commission feels the commitments are satisfactory, it may decide to accept them and make them legally binding. (FG/transl.fl)