Visa in the dock, faces anti-trust probe over price-fixing charges
EU regulators opened an in-depth investigation on Wednesday into whether cross border fees charged by credit card company Visa Europe amounted to price fixing.
By Agencies |
BRUSSELS : EU regulators opened an in-depth investigation on Wednesday into whether cross border fees charged by credit card company Visa Europe amounted to price fixing. EU Competition Commissioner Neelie Kroes warned Visa last year that anti-trust regulators could reopen a probe into its so-called multilateral interchange fees charged on payments customers make in another European country. The European Commission has said Visa���s charge system could unfairly inflate retailers��� costs.
The probe comes after Visa���s rival MasterCard was ordered in December to drop its cross-border card fees within six months or face huge daily fines. A similar fate could befall Visa if it is found to run afoul of EU competition rules. The EU probe will also focus on Visa���s ���honour-all-cards��� rule, which obliges retailers to accept all Visa-branded cards.
Large European retailers like Ikea and Tesco have called on the EU to take action against what they claim to be unfairly high fees they and consumers have to pay to credit card companies - notably MasterCard and Visa.
MasterCard has said it would take the commission decision against it to the EU court, claiming it would lead to higher cardholder costs and fewer electronic payments.
Visa had enjoyed a five year exemption from EU competition rules that expired at the end of 2007. Under that deal, Visa said it would reduce the level of its cross border charges from an average of 1.1% to 0.7% until the end of 2007 and to cap the level of such fees for specific services.
However, Kroes said in December that the level of Visa���s charges could still be too high after retailers filed complaints. Visa argues the fees are set at ���commercially viable levels��� and are used to invest in innovation and to bolster security of credit card payments.
Europeans make more than 23 billion card payments every year worth over euro1.35 trillion (US$2.1 trillion). However, they face extra costs using their cards in another European nation, something EU officials say holds back efforts to create a single market out of the EU���s 27 member countries.
The probe comes after Visa���s rival MasterCard was ordered in December to drop its cross-border card fees within six months or face huge daily fines. A similar fate could befall Visa if it is found to run afoul of EU competition rules. The EU probe will also focus on Visa���s ���honour-all-cards��� rule, which obliges retailers to accept all Visa-branded cards.
Large European retailers like Ikea and Tesco have called on the EU to take action against what they claim to be unfairly high fees they and consumers have to pay to credit card companies - notably MasterCard and Visa.
MasterCard has said it would take the commission decision against it to the EU court, claiming it would lead to higher cardholder costs and fewer electronic payments.
Visa had enjoyed a five year exemption from EU competition rules that expired at the end of 2007. Under that deal, Visa said it would reduce the level of its cross border charges from an average of 1.1% to 0.7% until the end of 2007 and to cap the level of such fees for specific services.
However, Kroes said in December that the level of Visa���s charges could still be too high after retailers filed complaints. Visa argues the fees are set at ���commercially viable levels��� and are used to invest in innovation and to bolster security of credit card payments.
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Europeans make more than 23 billion card payments every year worth over euro1.35 trillion (US$2.1 trillion). However, they face extra costs using their cards in another European nation, something EU officials say holds back efforts to create a single market out of the EU���s 27 member countries.
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