Visa ready to lower costs of cross-border card payments

Visa Europe said it was ready to negotiate lower fees on card payments made across EU borders in a move aimed at avoiding antitrust measures from the European Commission.

Peter Ayliffe, CEO of Visa Europe, said he did not exclude lowering the rate of fees as the Commission might request at the closure of an inquiry launched in March. “When you negotiate, you negotiate,” Ayliffe told a press conference in Brussels on Wednesday (2 April), describing the Commission’s approach to MIFs as “constructive”.

Visa maintains that its fees are justified “on cost grounds” but acknowledges that it has further explanation work to do on the benefits they might bring to consumers.

On Tuesday Internal Market Commissioner Charliee McCreevy echoed his colleague responsible for competition Neelie Kroes by saying that the Brussels line is not in principle against MIFs, provided that they are justified for technical and economic progress or to bring benefits to consumers.

Visa’s fees are currently capped at 0.7% of payments carried out with a credit or debit card. The threshold has been introduced in 2002 after the Commission intervened. MasterCard’s MIFs range between 0.4% and 1.2% of the transaction value.

Visa underlines that its position differs from MasterCard’s, which argued against the Commission’s intervention. “We believe that a negotiated settlement is the right way forward,” said Ayliffe.

In line with MasterCard, Visa also requested the Commission to reach an agreement with national regulators to prevent MIFs from being challenged by member-state authorities after a possible EU settlement.

To show its commitment to the EU’s plans, Visa presented a manifesto in which it commits to abiding by the requirements of the Single Euro Payment Area (SEPA), in particular by increasing the spread of debit cards in order to reduce the use of cash. The overall target is to provide one in five euros by electronic means in Europe by 2015, up from the current one in nine.

Commenting on Tuesday (1 April) about the Commission's March decision to prohibit MasterCard's MIFs, Internal Market Commissioner Charliee McCreevy said: "The Decision did not conclude that all MIFs are illegal per se. However, Mastercard could not demonstrate that its MIF contributed to objective efficiencies, meaning technical and economic progress, or that it benefited consumers".

Announcing the decision against MasterCard in December last year, Competition Commissioner Neelie Kroes said: "Multilateral interchange fee agreements such as MasterCard's inflate the cost of card acceptance by retailers. The Commission will accept these fees only where they are clearly fostering innovation to the benefit of all users."

On Wednesday (2 April), Visa Europe CEO Peter Ayliffe highlighted the difference between MasterCard and Visa cases on MIFs. "We believe that the current level of fees is justified on cost grounds, but we have to prove the benefits to retailers and consumers," he said. He added that Visa Europe was ready for a negotiated solution, underlining that "the Commission and national regulators should reach agreement among them" to avoid new cases against interchange fees at national level once the EU case is settled.

Announcing legal action against the Commission in March, Javier Perez, president of MasterCard Europecommented: "MasterCard firmly believes that market forces, not regulation, should drive key decisions such as the setting of interchange fees and retailers' choices over which forms of payment to accept. If left unchallenged, and especially if followed by national regulators, the Commission's decision would not only be bad news for consumers but a blow to the European payments industry."

In March the European Commission opened a formal investigation into Visa's cross-border multilateral interchange fees (MIFs), following the end of the temporary exemption granted to the US company in 2002 (EURACTIV 27/03/08).

In December 2007, the Commission had already condemned MasterCard's MIFs, ordering Visa's main competitor to eliminate them completely. MasterCard appealed in March against this decision (EURACTIV 04/03/08).

A multilateral interchange fee is an interbank payment made for each transaction carried out with a payment card. In the EU, over 23 billion payments are made every year with payment cards, the overall value of which exceeds 1,350 billion euros.

  • There is no deadline for the closure of the Commission's inquiry.

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