Visa commitments: A long wait for very little

GRTU is dismayed at the marginal progress being made to tackle the urgent issue of interchange fees. The decision last week from the European Commission to accept Visa's token commitments will do little to remove the burden of interchange fees from Europe's retailers and consumers.

The Commission announced that it will accept Visa's offer to cap its cross-border multilateral interchange fee (MIF) on consumer debit cards at a maximum weighted average of 0.2%. Unlike MasterCard, Visa has made no offer to reduce its MIFs on credit cards.

As the single euro payments area moves closer, the threat of a Europe-wide duopoly on the cards payment market looms ever larger. SEPA will put an end to cheap, efficient national debit card schemes, handing the market over to the well-established international brands. The profits for banks, currently assured by exorbitant interchange fees, mean that no issuing bank will do business with a new scheme operating on a lower fee model.

Without urgent action from the European authorities, MasterCard and Visa will keep the market to themselves, and SEPA will mean even higher costs for retailers and higher prices for consumers.

GRTU welcomes the Commission's continued investigation on Visa credit cards and related anti-competitive issues. However, the Commission may need to completely rethink its strategy on MIFs if it is to prevent the establishment of a SEPA card market permanently riddled with anti-competitive problems.

A further issue of concern is the failure of surcharging. Surcharges were intended to allow retailers to show the consumer the real costs of different payment means. In a competitive market, retailers would not be able to impose such charges without damaging their businesses. While several member states have decided not to allow the practice at all, where it is used, mainly for on-line transactions, some operators are imposing surcharges far in excess of real costs.

There are also a number of still outstanding issues:

There is still no progress on commercial cards: MIFs on such cards can be up to 8 times the MIFs on consumer cards.

The honour all cards rule still means that retailers cannot refuse overpriced cards

There is still little improvement on fees at national level in most member states.

The MIF commitments agreed still allow for percentages: there is no justification for this, when processing costs do not alter according to the value of the item bought.

Retailers still cannot benefit from single market savings by operating cross-border acquiring.