Visa Charges are "Unduly high"!

An agreement between Visa and banks which sets the fee retailers pay each time customers use its credit and debit cards has today been deemed unlawful by the competition watchdog.

The Office of Fair Trading (OFT) said the arrangement made between Visa and card issuers, which include most major banks, restricted competition and led to extra costs for consumers.











It said that the agreement imposed an "unduly high fee" on the organisations collecting payments for retailers, which was in turn passed onto consumers.

"We have been expecting this so we are not surprised by it, although we are disappointed with some of the words used," said Colin Grannell, managing director of Visa UK. "We do not agree that the rates are unduly high."

He said Visa had agreed a way of calculating its interchange fee with the European Commission and it used the same calculation in the UK. "We haven't seen the details yet," he added. "We will get that and think through that and then we will undertake more discussions with the OFT."

The rate at which Visa's UK interchange fee is set is not in the public domain, but the fee it charges in Europe is 0.7%, compared with 0.95% for MasterCard, although different fees are charged for different types of transaction.

At the end of June this year there were 42.8m Visa credit cards in issue in the UK, with transactions during the year totalling £87.2bn. The OFT has been investigating the "interchange charge" set by Visa since November last year, and the inquiry follows a similar investigation into Mastercard.

In September, the watchdog said Mastercard and card issuers had used the interchange fee to generate more money to cover the cost of extra services, such as loyalty schemes for consumers, and it branded the fees effectively as "a tax" on customers.
 








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