Visa card fees under EU pressure

The Commission wants Visa's cross-border fees to be lower

Visa Europe has been threatened with fines by the European Commission over the fees it levies on retailers when people shop abroad with its cards.

The Commission said the cross-border "interchange" fees inflated the cost of accepting Visa card payments and led to increased prices for customers.

Visa said it was extremely disappointed because it had recently cut its fees.

But the Commission, in a preliminary statement of objections, said Visa's changes were insufficient.

Disappointed

The charges "harm competition between acquiring banks, inflate the cost of payment card acceptance for merchants and ultimately increase consumer prices," the Commission said.

Peter Ayliffe, the chief executive of Visa Europe, said he did not accept the criticism.

"We are extremely disappointed that having converged to a point where we were close to agreement on debit, the Commission has decided to issue a statement of objections," he said.

"We have held detailed negotiations with the Commission and have agreed to follow their preferred economic model for justifying interchange rates," he added.

Investigations

Last week the Commission dropped a similar investigation into the fees charged by the other card issuer, Mastercard, after it agreed to reduce its own cross-border interchange fees for credit and debit card purchases.

Although Visa has reduced its fees they are still higher than those levied by Mastercard.

Visa's cross-border credit card transactions carry a fee of 0.61%, down from 0.7%, while its debit card fees are now 18 euro cents (16p) instead of 28 euro cents.

The European Commission's investigation into Visa's fees was launched in March 2008 while the probe into those of Mastercard began in 2007.