OFT objects to Visa transaction fee pact
It was always on the cards
The Office of Fair Trading says that Visa and its members, including most major banks, are breaking competition laws by agreeing a fee that is payable on card transactions. It follows a similar ruling last month against MasterCard.
The statement of objections focuses on what is called a domestic multilateral interchange fee, or MIF. Last month, it dubbed MasterCard's equivalent MIF as a "tax on consumers" because it believes that the cost of the fees is passed on to retailers and ultimately to consumers.
The OFT is of the view that the collective agreement between Visa and its member banks on the interchange fee charged between card issuing banks and merchant acquirers, on Visa card transactions taking place in the UK, restricts competition and infringes Article 81 of the EC Treaty and the UK's Competition Act.
The OFT believes that, like the MasterCard MIF agreement, the Visa MIF agreement leads to an unduly high fee being paid to card issuing banks by merchant acquirers on every Visa transaction.
The parties now have an opportunity to make written and oral representations to the OFT.
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