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BANKING NEWS: Commission Binds Visa Europe on Lower Interbank Fees for Debit Cards

Tuesday, 15 February 2011 22:55

The European Commission has made legally binding the commitments offered by Visa Europe to significantly reduce its Multilateral Interchange Fees (MIFs) for debit card payments. In line with the commitments, the maximum weighted average MIF applicable for debit card cross border transactions and to national debit transactions in those countries where MIFs are set directly by Visa Europe, will be reduce to 0.2% of the value of the transaction. In itself, this represents a reduction of approximately 60% on average for domestic MIFs and 30% for cross-border MIFs. In addition, Visa Europe is dedicated to maintain and further develop measures aimed at increasing transparency and competition in the payment cards market.

The MIFs are collectively determined and charged between banks for each payment made with a debit card. Such fees are integrated in the price that banks charge to businesses for handling a transaction, and therefore require a cost which businesses include in the price of good or services they sell to consumers. The fees at stake concern Visa debit card transactions, which are payment transactions that are debited from an individual’s bank account as soon as a purchase is made.

The countries which will benefit from a domestic MIF reduction are those within the European Economic Area where the MIFs are set by Visa Europe rather than by local bank associations. When the commitments were proposed, the countries concerned were Greece, Hungary, Iceland, Ireland, Italy, Malta, Sweden, Luxembourg and the Netherlands. Nevertheless, during the lifetime of the commitments, the list of countries concerned by the commitments may change.

The Commission finds the offer to be suitable to remedy the competition concerns, and, in this respect has closed part of its investigation through a commitments' decision according to Article 9 of Regulation 1/2003 (the Antitrust Regulation).