European competition commissioner Joaquin Almunia has welcomed
commitments by Visa Europe to “significantly cut” its multilateral
interchange fees (MIFs) for debit card payments.
Visa Europe has proposed to cut its intra-regional MIF – the fee
it charges on each debit transaction in the European economic
area – to 0.2 percent, the same level MasterCard agreed to
reduce its own debit MIF to in April 2009. Both Visa Europe
and MasterCard have been forced to reduce the fees after undergoing
antitrust investigations by the Commission in recent years. The
Commission said in 2009 it believes MIFs restrict competition
between the banks of merchants who accept card payments.
Almunia said: “I welcome Visa Europe’s
willingness to reduce multilateral interchange fees and to make its
rules more transparent. This will improve the efficiency of the
European financial system to the benefit of consumers and
Visa said the agreement would promote the development of the
Single Euro Payment Area (SEPA) and the initiative to migrate
cash payments on to card products.
Visa Europe President and CEO Peter Ayliffe said: “It [the
commitment] will provide much needed legal certainty to the
industry and provides a mechanism for a revision to the average
0.2% rate if further data becomes available on the costs of
different means of payment, including cash. I am satisfied
that these commitments will lead to the establishment of a suitable
cost of cash methodology which can be applied both on a
cross-border and a domestic basis.
The decision does not cover MIFs for
consumer credit and deferred debit card transactions, an
investigation into which is still ongoing. Countries benefiting
from the reduction in domestic debit MIFs include Greece,
Hungary, Iceland, Ireland, Italy, Malta, Sweden, Luxembourg, and
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Domestic MIFs in these countries will
decline by around 60 percent on average, while cross-border MIFs
will be reduced by 30 percent.
A Visa spokesman added: “Many of these
countries have their own arrangements for setting domestic
interchange or have few immediate debit card transactions,
therefore the overall impact is minimal.”
Read more in the May edition of