Credit card provider Visa Europe will cap the transaction fees it charges, the European Commission said, curbing an important money earner for banks behind the payment scheme.
The move ends a long-running antitrust probe by the Commission that was triggered by retailers’ gripes about the world’s biggest card payments company by the volume of transactions. It is a victory for retailers and the Commission, which had pushed for reduced fees on credit and debit cards, saying the annual cost to businesses across Europe was €10 billion.
The settlement to end the dispute means Visa Europe’s inter-bank credit card fees, a cost that consumer groups say ultimately falls on card users, will be capped at 0.3 per cent (a reduction of about 40 to 60 per cent) – the same level as rival MasterCard. It is a setback for Visa Europe, the European licensee of Visa Inc, owned and operated by over 3,000 EU financial institutions.
It had offered to take this step last year after the EU competition authority began its investigation.
“The cap on inter-bank fees for Visa Europe’s credit cards and the commitments ensuring cross-border competition are excellent news for consumers, since the fees paid by retailers end up on their bills,” said EU Competition Commissioner Joaquin Almunia.
Inter-bank fees are collected and kept by banks processing payments using cards. While the card payment companies do not benefit directly from the charge, they fear a crackdown will discourage lenders from issuing their cards.
MasterCard has said the value of cross-border card transactions is less than five per cent of all purchases made by cardholders.
The company said it would now be able to put the issue behind it.
“Visa Europe will continue to focus on developing and providing payment solutions for the benefit of consumers, rather than pursuing lengthy legal cases,” Visa Europe CEO Nicolas Huss said.
European consumers and businesses are making more than 40 per cent of their non-cash payments per year through payment cards.
Visa’s credit and debit cards represent approximately 41 per cent of all payment cards issued in the European Economic Area.