Deja vu

Visa Europe targeted by the EC on credit card interchange fees

Haven’t we been here before? The EC says Visa Europe's cross-border credit cardinterchange fees restrict competition between banks and infringe antitrust rules.

As already happened in the US in 2005, history isrepeating itself in Europe with the European Commission saying that its preliminary view is that the Visa multilateral interchange fees (MIFs) for consumer credit cards violate its rules designed to stop cartels and restrictive business practices.

The EC says in a supplementary statement it thinks that MIFs "harm
competition between acquiring banks, inflate the cost of payment card
acceptance for merchants and ultimately increase consumer prices".

It also "doubts" that Visa's MIFs are "necessary to create
efficiencies that benefit merchants and consumers". If the EC has such
doubts, Visa could no longer claim to be entitled to an exception from the
rules.

This supplementary statement from the EC is the latest development in a long
battle between Visa and the EC which won its first victory with the slashing by
Visa of its multilateral interchange fees for debit cards at the end of 2010.
The battle is now raging for credit cards.

There is in fact little Visa can do other that make an official written reply
or ask for a hearing on the issue. However fines and penalties fort antitrust
breaches can be up to 10% of its turnover so it’d better act quickly. In May 2012
an EU court already dismissed MasterCard's challenge against an EC ruling that
MC’s cross-border interchange fees for both credit and debit cards violated
competition law.

As if this was not enough, both card networks are also facing interchange issues
in the US: whilst they had agreed a $7.25 billion class action settlement with
retailers in July 2012, now several leading merchants have now come out against
the plan.