Visa threatens OFT with legal challenge
17 January 2006 | 7769 views | 0
Visa Europe says it will take legal action against the UK's Office of Fair Trading (OFT) if the regulator insists on additional cuts to its interchange fees.
Last October the OFT ruled that the collective interchange agreement between Visa and its member banks leads to an unduly high fee being paid to card issuing banks by merchant acquirers on every Visa transaction.
The regulator is still investigating the interchange fees, but according to press reports Visa Europe will take legal action if, following the probe, the OFT insists it cut interchange fees in the UK.
Marc Temmerman, Visa Europe's executive vice president for external relations, told Reuters reporters that the firm was already cutting fees under a 2002 agreement reached with the European Commission.
He says the company cannot accept from a legal basis why one principle is valid for the whole of Europe but not valid for the UK, as there is a single market.
The OFT's investgation into the Visa fees is not expected to start until MasterCard has launched an appeal to an OFT decision on its own interchange charges. The UK watchdog ruled that MasterCard's interchange fees infringed competition rules in September last year.
The news comes as Visa Europe reported a 15% increase in spending on its network, which reached more thn EUR684bn in 2005.
The growth was due to increasing use of Visa's chip-and-pin debit cards, as well as growing use of credit cards in Eastern European countries.
Philippe Menier, COO, Visa Europe's, told reporters that the growth of chip-and-pin had led to a dramatic fall in credit card fraud and in the next two year the company can expect to reduce fraud by 50%, or EUR360m, to EUR400m.