Fabian Demicoli

Antitrust: Commission market tests Visa Europe’s commitment – frequently asked questions

The European Commission is inviting comments from
interested parties on commitments offered by Visa Europe. Visa Europe has
offered to significantly cut its multilateral interchange fees (MIFs) for
credit card payments, to a level of 0.3% of the value of the transaction (a
reduction of about 40 to 60%) and to reform its rules in order to facilitate
cross-border competition. The proposals by Visa follow the sending of a
supplementary statement of objections by the Commission in July 2012.

announced in May 2013 the Commission is now seeking feedback on these proposals
from interested parties through a market test. If the proposals address the
Commission's competition concerns, the Commission may decide to make them  legally binding on Visa Europe. Payments by
card play a key role in the EU internal market, in particular 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

What are interchange fees?

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. 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).

When a customer uses a payment card to buy from a
merchant, the merchant receives from his bank (the acquiring bank) the sales
price less a 'merchant service charge', the fee a merchant must pay to his bank
for accepting the card as means of payment for that transaction. A large part
of the merchant service charge is determined by the interchange fee. The
customer's bank (the issuing bank), in turn, pays the acquiring bank the sales
price minus the MIF and the sales price is deducted from the customer's bank
account. The MIF is therefore an extra cost that is charged to the merchant,
who then passes it on to consumers in the final price of the good or service.

 The full version of the commitments is available
on the Commission's competition website at:


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