Brussels presses Visa to cut charges

Visa, the credit card company, is being pushed to lower charges on purchases, just days after Brussels threatened to fine its main rival, MasterCard, for the same reason.

The European Commission sent a written complaint to Visa over charges it imposed on retailers' banks known as multilateral interchange fees (MIFs). The Commission said it had reached a preliminary opinion that the charges infringed EU anti-trust rules.

The Commission said Visa's "high" charges did not only affect cross-border transactions, as was the case with MasterCard, but there were also cases where charges on domestic transactions were directly set by Visa instead of by the banks.

The Commission said such charges were "harming competition between acquiring retailers' banks, inflate the cost of payment card acceptance for merchants and, ultimately, increase consumer prices".

According to the Commission, Visa's credit and debit cards represented about 36 per cent of all payment cards issued in the European Economic Area (EEA), comprising all EU member states, Iceland, Liechtenstein and Norway.

Visa has the largest acceptance network within the EEA with over five million merchants accepting its payment cards. In 2006, a total of 27 billion card payments were made in the EEA, for a total value of €1,600 billion.

Only last week, MasterCard reached an interim agreement with the Commission to cut its fees from June. The Commission estimates the agreement will reduce charges by up to 84 per cent and bring MasterCard in line with an anti-trust decision in 2007.

However, MasterCard said it was pursuing an appeal against the anti-trust decision and the agreement significantly undervalued the benefits of payment cards to retailers.

In Malta, the Chamber of Small and Medium Enterprises - GRTU has repeatedly called on both card companies to revise their charges downwards.