Brussels, 26/02/2014 (Agence Europe) - On Wednesday 26 February, the European Commission rendered legally binding the commitments offered by Visa Europe to significantly cut its multilateral interchange fees (MIFs) for credit card payments (commission paid by the retailer's bank to the consumer's bank after a purchase made by credit card) to 0.3% of the value of the transaction (a reduction of about 40 to 60%). These commitments, which will be effective for a period of four years from 1 January 2015, should reduce the costs borne by retailers when they receive payment by card and, therefore, the bill paid by the card holder customer, who ultimately has to bear these costs.
The commitments made binding seek to address the concerns expressed by the Commission to Visa Europe in July 2012 (see EUROPE 10667), relating to:
- rules applied by Visa on cross-border purchases which require banks to apply the inter-bank fees of the country in which the trader is established, even though the commission of their country of origin is more favourable. These rules compartmentalise the market and prevent traders from benefitting from better conditions offered in other member states. To remedy this situation, Visa has undertaken to allow acquiring banks (those of the retailers) to apply a reduced cross-border inter-bank fee (0.3% for credit and 0.2% for debit transactions) for cross-border clients. The same commissions will be applied to purchases from traders established in the European Economic Area (EEA) using Visa debit and consumer cards issued in countries outside the EEA but belonging to the Visa Europe territory (for example, Switzerland, Israel, Turkey and Greenland).
- all inter-bank feed set by Visa for transactions by credit card (by Visa Inc when the card holder's bank is not in the territory covered by Visa Europe and by Visa Europe for transactions carried out in its territory and those carried out within the ten EEA member states). The Commission, then the General Court, took the view that similar MIFs set by MasterCard limited competition. In response, Visa Europe has pledged to cap credit card MIFs at 0.3% for all consumer credit card transactions in the EEA when it sets rates. This affects both cross-border fees (a card issued in one EEA country used in another) and those levied nationally in the ten countries in question. Visa pledges, too, to simplify its inter-bank fee structure and make the invoicing of card acceptance services more transparent to traders. In terms of MIFs levied on transactions carried out in the EEA by the holder of a card issued outside the Visa Europe territory (for example, in the United States), the Commission will continue with the procedure launched against Visa Inc, in tandem with the one against Visa Europe.
The commitments imposed on Visa Europe with regard to credit card transactions follow on from those the company accepted in 2010 in relation to consumer card transactions. (FB)