On December 8th 2010 at Brussels, the European Commission has made legally binding commitments offered by Visa Europe, to significantly cut its multilateral interchange fees (MIFs) for debit card payments.
Interchange fees are charged by a cardholder's bank (the 'issuing bank') to a merchant's bank (the 'acquiring bank') for each sales transaction made at a merchant outlet with a payment card.
Interchange fees are either agreed bilaterally, between one issuing and one acquiring bank, or multilaterally, by a number of issuing/acquiring banks or by means of a decision binding all banks participating in a payment card scheme. The industry refers to these multilateral interchange fees as "MIFs". A MIF can be a percentage, a flat fee or a combined fee (percentage and flat fee).
In March 2008, The European Commission has decided to open formal antitrust proceedings against Visa Europe Limited in relation to its multilateral interchange fees (MIF) for cross-border point of sale transactions.
The legal base of this procedural step is Article 11(6) of Council Regulation No 1/2003 and Article 2(1) of Commission Regulation No 773/2004.
Article 11(6) of Council Regulation No 1/2003 provides that the initiation of proceedings relieves the competition authorities of the Member States of their authority to apply the competition rules laid down in Articles 81 and 82 of the EC Treaty. Moreover, Article 16(1) of the same Regulation provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.
Article 2(1) of Commission Regulation No 773/2004 provides that the Commission can initiate proceedings with a view to adopting, at a later stage, a decision on substance according to Articles 7-10 of Council Regulation No 1/2003 at any point in time, but at the latest when issuing a statement of objections or a preliminary assessment notice in a settlement procedure. In the case at stake, the Commission has chosen to open proceedings before any such further steps.
On December 8th 2010, in order to respect the EU decision, Visa Europe has offered to cap the weighted average MIF for consumer immediate debit card transactions at 20 basis points (bps), i.e. 0.20% per transaction. For instance, if the average transaction value were €50 an average MIF of maximum 10 cents would be applied.
The cap would be applicable to cross-border transactions within the European Economic Area (EEA) and, separately, to domestic transactions in each EEA country where MIFs are either set directly by Visa Europe (Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, Malta, the Netherlands, and Sweden) or the Visa Europe cross-border rates would apply by default.
NB: This summary is only for information and is not designed to interpret or replace the reference document, which remains the only binding legal text.
Source: http://europa.eu Reference: IP/10/1684 Date: 08/12/2010
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