Monday, April 7, 2008
VISA Expects to Strike Deal With EU
" Visa and EU may reach deal over charges BRUSSELS: Visa Europe said Wednesday it expects to strike a deal with the European Commission that would settle an antitrust investigation into EU charges of price-fixing. The payments card network - which is separate from the Visa based in the United States - said it is trying to convince regulators that the amount it charges for using a card in another country are justified. The EU opened a formal investigation into Visa's fee system last month, saying it may unfairly inflate retailers' costs and raise prices for customers at the cash register. In December it ordered Visa's rival MasterCard to drop cross-border card fees within six months or face huge daily fines. Europeans make more than 23 billion card payments every year worth over 1.35 trillion, or $2.1 trillion. Yet they face extra costs using their cards in another European nation, something EU officials say holds back efforts to create a single market out of the EU's 27 member countries. The chief executive of Visa Europe, Peter Ayliffe, said EU officials had told him they were keen to negotiate a binding agreement with the card industry to end the case, something Visa also favors as the 4,600 banks it represents gear up to make major investments to simplify banking payments across Europe. "We believe a negotiated settlement is the right way forward," he told reporters. "The earlier it happens, the better for everybody. That way we get certainty." But he said Visa was adamant that it would stick to the average 0.7 percent interchange fee it charges for processing credit and debit card payments outside the cardholder's country, claiming it benefited shops and shoppers and helped provide banks with a good business case for dealing with foreign payments. Visa insists that card payments are cheaper than handling cash and more of them would save Europeans close to 1 billion euro. It also opposed any changes to the "honor-all-cards" rule which forces retailers to accept all Visa-branded cards, including debit cards, even if they carry a higher interchange fee. Large European retailers like Ikea, Carrefour and Tesco have called on the EU to take action against what they claim to be unfairly high fees they and consumers must pay to card companies such as MasterCard and Visa. Ikea, the furniture chain, pays fees of about 90 million, or $141 million, annually, while the British supermarket chain Tesco pays around 128 million to the banks for processing credit and debit cards.