Visa might face the same settlement that the card company's main rival MasterCard is currently appealing, according to a source that has been following Visa's negotiations with EU Competition Commissioner Kroes.
The card company received a statement of objections from the European Commission in April 2009. The EU executive considered that multilateral interchange fees (MIFs) on Visa card payments – charges merchants pay when accepting a card payment from a consumer – run counter to EU antitrust rules.
"MIFs harm competition between acquiring banks, inflate the cost of payment card acceptance for merchants and ultimately increase consumer prices," read the statement published in April.
Card companies like Visa will now be asked to settle for the same lower MIFs on debit and credit card payments as MasterCard, reveal sources close to the Commission's process for resolving the case.
After the EU executive had put it under pressure last April, MasterCard decided to bring cross-border MIFs on credit card transactions down to 0.3% from the current range of 0.8% to 1.9% (EurActiv 07/04/10).
On the Maestro network of debit card transactions, MasterCard agreed to cut charges to 0.2%, from the current range of 0.4% to above 0.75%.
Visa argues that its MIFs are calculated to cover an array of costs that card issuers have to pay in order to provide payment cards, process transactions, extend credit to cardholders and provide a payment guarantee to merchants.
Currently, Visa applies a 0.61% rate for cross-border EU credit transactions, and an average of €18 cents for debit payments.
Upon closing the case with MasterCard, Commissioner Kroes voiced expectations that Visa would shortly follow suit.
"I will not allow Visa to benefit at the expense of MasterCard," Kroes said, adding that the fees and the methodology adopted by MasterCard could be used as a kind of benchmark for others in the sector.
The EU's competition authorities are allegedly working very hard to wrap up a decision on Visa before Kroes hands over the competition portfolio - subject to MEPs' approval of the new Commission - to Commissioner-designate Joaquin Almunia.
However, MasterCard is currently appealing the Commission's settlement on MIFs at the European Court of First Instance.
New card schemes on the up?
Dominant card companies may also face growing competition from other European companies which have entered the payment cards market.
The European Central Bank (ECB) and the European Commission have been pushing for additional players in the EU and three main companies have emerged.
Both the ECB and the EU executive fear that the Single Euro Payments Area, a bank-led scheme to harmonise payments across the euro zone, will tip the cards market in favour of dominant players.
However, Dominique Buysschaert, chief executive and founder of PayFair, a pilot card scheme in Belgium, argues that new EU rules on payments will help, not hinder new players.
The Payment Services Directive, which has been transposed in all but 11 of the 31 EU/EEA countries including Switzerland, established so-called Payment Institutions (PIs): non-banking companies like utilities or mobile phone operators. These will widen card companies' scope for business, argues Buysschaert.
The PayFair CEO also added that its pilot scheme at the Belgian Colruyt retailer, which has currently set MIFs at 0.1% lower than the Commission's settlement with MasterCard, will be rolled out at five other Belgian retailers in the coming weeks.
Other schemes include Monnet and the Euro Alliance of Payment Schemes (EAPS).
The latter gained some ground last year as two of its participating banks opened ATM networks to domestic debit cardholders in Italy and Germany. The alliance has said that acceptance at cross-border Point of Sale (POS) – payment terminals – will follow this year.
Monnet has more support from the banking industry, including BNP Paribas, Société Générale and Deutsche Bank, but the scheme's operators have not yet said when it will begin issuing cards.
The Commission and the ECB are concerned that the banks, which own national debit schemes, will choose to follow the example set by Austria, the UK and Switzerland and issue MasterCard's Maestro and Visa's V Pay instead of their legacy schemes.
The Commission also predicts that the Dutch debit scheme, PIN, will disappear to become either Maestro or V Pay.
Debit cards throughout the EU already use Maestro and Visa, but mostly only for cross-border transactions, which account for a paltry 3% of the market.
