On 26 April 2010 the European Commission ("Commission") announced that Visa Europe has offered commitments to significantly cut its multilateral interchange fees ("MIFs") for debit card payments. Visa has committed to reduce to 0.2% (of the final price of a product) the fee that is collectively determined and charged between banks for each debit card payment. The reduction relates to all cross border transactions and certain national transactions (where Visa Europe sets the fees directly).
The Commission will now market test the proposals put forward by Visa before adopting a decision making the commitments legally binding (under Article 9 of Regulation 1/2003).
The Commission began investigating Visa's MIFs in March 2008. The MIFs in question are collectively set fees paid by merchants' banks (acquiring banks) to cardholders' banks (issuing banks) for point of sale transactions with Visa's payment cards. All banks participating in a payment card scheme relating to a particular brand are bound by the MIF. Retailers are charged for the fee which is generally passed onto the consumer via the price of goods.
A statement of objections was issued against Visa on 3 April 2009, which covered all MIFs set by Visa for point of sales transactions with payment cards in the EEA. The Commission was concerned that Visa's MIFs damage competition between merchant banks and increase the cost of card transactions to the detriment of consumers.
This offer of commitments, if accepted, will close the case in respect of fees for debit card transactions, however, the investigation into other aspects of Visa's payment systems and the fees relating to credit and commercial card transactions will continue.
Visa's card acceptance network is the largest in the EEA and accounts for nearly 36% of all issued credit and debit cards and it is anticipated that the reduction in fees would mean a 60% drop in the cost of domestic transactions in the EEA and a 30% fall for cross-border transactions.
Visa's commitment is in line with a unilateral undertaking given by MasterCard in April 2009 to reduce its MIF per transaction to 0.2% for consumer debit cards (at that time MasterCard also reduced its MIF per transaction to 0.3% for consumer credit cards).
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