In anticipation of the pending SEPA
implementation process, Visa Europe has recently elected to remain
a European company. At an extraordinary general meeting, Visa
Europe’s European member banks overwhelmingly voted in favour of
changes to its articles of association that would enable the
company to become fully autonomous of the new publicly listed Visa
Inc, the details of which were first outlined in October 2006 (see
CI 369). With the proposed restructuring, Visa International, Visa
Canada and Visa USA will become subsidiaries of Visa Inc. Visa
Europe will remain a separate body focused on the European market
and its particular challenges within the payments industry.

“This overwhelming vote in favour of Visa Europe’s independent
European status, and its membership association model, clearly
shows that Visa Europe is meeting the wishes of European banks,
which will help them effectively compete in the new SEPA world that
comes into existence on 1 January 2008,” said Peter Ayliffe,
president and CEO of Visa Europe, in a statement issued by the

Both Visa and MasterCard have recently been facing intense
regulatory pressure regarding their interchange fees in a European
market that is preparing itself for the implementation of SEPA. The
interchange exemption at the hands of the European Union’s
Competition Commission expires at the end of this year, while the
implementation of SEPA will further remove barriers to

“The most important thing for us is to really develop the payments
market in Europe,” said Ayliffe in an interview with CI. He further
stressed the importance of investment in infrastructure to help
growing European markets, and emphasised that a lot of the funding
for this comes from interchange. Both the European Central Bank
(ECB) and the European Commission (EC) have recently acknowledged
the need for interchange fees, though they still remain undecided
on the level required.

The ECB as well as the EC are also both pushing for a viable third
payment network to break the duopoly of Visa and MasterCard.
However, banks have so far refrained from developing a new
pan-European card scheme, suggesting that for the immediate future
it will be only the two existing international networks that will
reach SEPA compliance requirements. “As long as there is a level
playing field, we’ve always welcomed competition in the market,”
said Ayliffe, “as we feel that we’ve got the infrastructure, and I
think we can offer all sorts of value to members.”

However, he remains unconvinced that a third scheme in Europe will
help matters. “I think that what Europe needs now is to compete on
the current rail tracks that exist for payment. Competition comes
from our members competing on our platform. They’re the ones
looking to make profit. What Europe needs now is to develop
innovative products that encourage greater usage of electronic

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Technology innovation

And it is perhaps within the realm of payment technology innovation
where Visa Europe’s status as a membership association may be more
supportive, in particular with contactless payments and mobile
technology. “We work very closely with all the members, and we’re
constantly hearing from them about what they’re looking for, and
we’re able to show them the next new initiative,” said Ayliffe.
“Because we’re not competing with them, we can work in
collaboration.” Visa’s chip and PIN V PAY debit solution has been
highly successful so far, with over 4 million merchants and 22
issuing banks signed up to the scheme.

Ayliffe is also excited about Visa’s contactless solution, payWave.
Five of Visa Europe’s member banks – HSBC, HBOS, Lloyds TSB, Royal
Bank of Scotland and Barclays – have been acquiring Visa payWave
merchants in London and began issuing Visa payWave cards in
September 2007. Barclays has also recently launched the OnePulse
multifunction card, which uses payWave technology in addition to
the standard chip and PIN facility (see CI 386).

Visa Europe is also working with countries on the continent to
launch payWave. France’s Société Générale has announced a pilot
programme for payWave technology in the La Défense business
district of Paris. Similarly, Barcelona-based banking giant La
Caixa will introduce the first Visa payWave cards in Spain with
acceptance in high-volume retail environments. Visa payWave will
also be used in a mobile payment trial in Germany, in conjunction
with the Frankfurt-based transit agency