European Commission accepts Visa Europe credit card fee cap proposal for cross-border credit card payments at 0.3%

The EC has accepted Visa Europe’s promise to cap its multilateral interchange fees (MIFs) for cross-border credit card payments at 0.3%. The move renders Visa’s commitment to slash its fees by up to 60% legally binding, finextra.com said. Visa made the concession last May in the wake of anti-trust proceedings initiated by the EC in July 2012.

Visa will also reform its rules so that banks will be able to apply a reduced cross-border inter-bank fee when they compete for clients in other member states.

EC competition commissioner Joaquín Almunia says: „The cap on inter-bank fees for Visa Europe’s credit cards and the commitments ensuring cross-border competition are excellent news for European consumers, since the fees paid by retailers end up on their bills.”

Payments by card play a key role in the Single Market, both for domestic purchases and for purchases across borders or over the internet. European consumers and businesses are making more than 40% of their non-cash payments per year through payment cards. Any competition distortions in this field may therefore hamper the good functioning of the Single Market and harm European consumers through higher prices, according to the press release.

The agreement on credit card transactions comes after a similar cap – of 0.2% – was hammered out by the EC and Visa for debit cards in 2010. Visa rival MasterCard is appealing a legal judgement requiring it set the same caps.

The Commission says it will continue proceedings against Visa Inc. in relation to international fees – such as fees that apply when a tourist from the US 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 Europe.