In 26 February 2014, the European Commission announced its
decision to render legally binding the commitments offered by Visa
Europe in an on-going investigation against its multilateral
interchange fees for credit card payments. The investigation was
initiated when the Commission sent Visa a supplementary statement
of objections in July 2012, informing them that the inter-bank fees
set by Visa and related practices may violate EU antitrust rules
(Article 101 of the Treaty on the Functioning of the European Union
– TFEU). These inter-bank fees are paid by merchants'
banks (acquirers) to cardholders' banks
(issuers) for transactions with Visa's
consumer credit cards. The concerns related in particular to:
Rules on 'cross-border
acquiring' in the Visa system that limit the possibilities of a
merchant benefiting from better conditions offered by banks
established elsewhere in the internal market. These rules oblige
banks to apply the inter-bank fees of the country where the
merchant is located, even if the fees in their home country are
lower. As a result, cross-border competition remains limited, the
internal market is artificially segmented, and merchant service
fees for accepting cards vary widely across the European Economic
All inter-bank fees set by Visa for
transactions with consumer credit cards in the EEA. Currently, Visa
Inc sets the fees for international transactions (where the issuer
is outside the territory of Visa Europe) and Visa Europe sets the
fees for cross-border transactions within its territory, as well as
fees for domestic transactions in ten EU/EEA Member States
(currently Belgium, Hungary, Iceland, Ireland, Italy, Latvia,
Luxembourg, Malta, Netherlands and Sweden).
Visa Europe's commitments
In these commitments, which complement its commitments of 2010
on debit transactions, which were made legally binding by the
Commission in December 2010, Visa Europe undertakes:
As regards cross-border
acquiring: to allow acquirers from 1 January 2015 to apply
a reduced cross-border inter-bank fee (0.3% for credit and 0.2% for
debit transactions) for cross-border clients. This is expected to
introduce competition in domestic inter-bank fees and lead to
considerably lower rates for merchants in the EEA, also benefiting
final consumers. Visa Europe also agreed to apply the same fees to
transactions carried out with merchants located within the EEA by
Visa consumer credit and debit cards issued in non-EEA countries
located in the territory of Visa Europe.
As regards inter-bank
fees: Visa Europe agrees to cap its credit card MIFs at
0.3% for all consumer credit card transactions in the EEA where
Visa Europe sets the rate. This affects cross-border fees (where a
card issued in one EEA country is used in another EEA country) and
domestic fees in currently ten Member States, and represents a
reduction of about 40-60% in the fees. The level of 0.3% for credit
card transactions was also offered by MasterCard in its
undertakings in 2009.
transparency: to simplify its inter-bank fee structure,
and make the invoicing of card acceptance services more transparent
The Commission is continuing the proceedings against Visa Inc.
on international inter-bank fees. These are the fees that apply
when a card holder from outside the Visa Europe territory (eg the
U.S.) uses his Visa credit card to make a purchase at a merchant in
the EEA. These fees are set by Visa Inc. and not by Visa
How does the decision affect Turkey?
As mentioned above, one of Visa Europe's commitments on
cross-border acquiring is to apply the same fees (0.3% for credit
and 0.2% for debit transactions) to transactions carried out with
merchants located within the EEA by Visa consumer credit and debit
cards issued in non-EEA countries located in the territory of Visa
Europe. These countries include Andorra, Faroe Islands, Greenland,
Israel, Monaco, San Marino, Svalbard and Jan Mayen Islands,
Switzerland, Turkey, and Vatican City.
This specific commitment of Visa Europe means that, from now on,
issuer banks located in Turkey will be paid lesser interchange fees
when their Visa cardholders carry out transactions with merchants
located within the EEA. Thus, a reduction of these fees will
adversely affect banks located in Turkey. However, this may benefit
the consumers who use these banks' credit cards, provided that
the merchants pass on these cost savings to their customers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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