The European Commission this week resurrected its long-standing bone of contention with Visa over the multilateral interchange fees (MIFs) it charges retailers in Malta and seven other member states.
Announcing a fresh investigation this week, Brussels took exception to Visa’s continued practice of levying the MIF direct fee on all transactions involving consumer credit cards.
Such inter-bank fees are paid by merchants’ banks (acquirers) to cardholders’ banks (issuers) for transactions with Visa’s consumer credit cards. In Malta, retailers pay both a merchant service charge as well as the multilateral interchange fee, which, combined, stand at an average of three per cent of the value of each point of sale transaction.
MIFs are currently levied on all cross-border transactions in the European Economic Area, as well as on domestic transactions in just eight EU member states – Malta, Belgium, Hungary, Ireland, Italy, Luxemburg, The Netherlands and Sweden.
The Commission said this week it believes the practice breaches EU antitrust rules and prevents merchants in countries such as Malta from benefiting from lower MIFs as retailers in other member states do.
The European Commission this week informed Visa of its additional concerns over possible violations of EU antitrust rules resulting from the practice through a so-called ‘supplementary statement of objections’, which will open the way for further investigation into the issue, which had begun with the opening of proceedings against Visa back in 2008. Visa Europe had offered commitments to cap its debit card MIFs at 0.20 per cent, which the Commission made binding in December 2010 but proceedings over consumer credit MIFs continued.
Such MIFs are a significant part of the total cost that retailers must pay for accepting Visa’s consumer payment cards and have an effect on the prices retailers charge consumers.
The Commission this week expressed its preliminary view that MIFs “restrict competition between banks and infringe EU antitrust rules that prohibit cartels and restrictive business practices”.
At this stage, the Commission said it also doubts that Visa’s MIFs “are necessary to create efficiencies that benefit merchants and consumers and could therefore be entitled to an exception from these rules”.
The Commission also reached the preliminary conclusion that MIFs reduce price competition between banks by creating an important cost element common to all acquirers, and that Visa’s MIFs harm competition between acquiring banks, inflate the cost of payment card acceptance for merchants and ultimately increase consumer prices.
The Commission’s analysis follows the judgment of the EU General Court of May 2012 in the MasterCard case, which fully upheld the Commission’s findings in this respect.
Furthermore, the Commission said it believes that the MIFs’ contribution to technical and economic progress, which could justify an exemption under Article 101(3) of the Treaty on the Functioning of the European Union, has not been proved.
“Even if this were the case,” the Commission said, “Visa MIFs are not set in a way that would allow consumers to enjoy a fair share of such benefits. Moreover, the actual Visa MIFs do not appear to be indispensable to the attainment of the efficiencies claimed.
“In addition, the Commission holds the preliminary view that rules obliging cross-border acquirers to pay MIFs applicable in the country of transaction hinder cross-border acquiring and maintain the segmentation of national markets.”
Visa’s credit and debit cards represent approximately 41 per cent of all payment cards issued in the EEA. Visa has the largest acceptance network within the EEA with over five million merchants accepting its payment cards. In 2010, a total of 35 billion card payments were made in the EEA, with a total value of €1.8 trillion.