Visa Europe Offers To Chop Interchange Rates To End Probe

Visa Europe has offered to cut its interchange rates in Europe to match those of MasterCard (NYSE:MA), in a move the giant card brand hopes will settle a European Union antitrust investigation, Reuters reported on Tuesday (May 14).

The deal would mean Visa Europe's cut of each transaction would fall to 0.3 percent for credit cards and 0.2 percent for debit, cutting those interchange rates by as much as half. The cuts would be valid for four years and would apply to domestic and cross-border fees.

Visa Europe is the largest card network in the EU, with its brand on about 41 percent of credit and debit cards issued there. EC antitrust regulators launched their investigation last year, saying that Visa's fees harmed competition between banks and led to higher consumer prices. There's no indication whether the EC will accept Visa's proposal to end the investigation; there will be a public comment period on the proposal before any decision is made.

MasterCard was hit with the same kind of investigation in 2009, which is why Visa is proposing to ratchet its interchange rates down to match MasterCard's. MasterCard is in the process of appealing the EC's decision in that case. In April, the EU said it is also investigating MasterCard's fees on transactions when a card from outside the Eurozone is used for shopping in the 27-nation bloc.

Meanwhile, retail association EuroCommerce—whose members include Tesco, Carrefour, Ikea and Inditex—is lobbying the EC for stronger interchange rules, including standardized interchange rates across the Eurozone. That would allow merchants to centralize their transaction acquiring process, the group said.

For more:

- See this Reuters story
- See this Bloomberg story
- See this EuroCommerce news release

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