Visa reaches settlement with ComCom over interchange fees

Wednesday 12th August 2009

Credit card issuer Visa has reached settlement with the Commerce Commission over its practice of smearing credit card fees across other transactions.

Visa International Service Association and Visa Worldwide Pte have signed an agreement on the interchange fees issues, the commission announced today. Interchange fees are charged to cover banks' costs of credit card transactions.

Visa will change the way its scheme rules apply in New Zealand giving more flexibility to credit card issuers to set interchange fees and merchants to apply surcharges on credit card payments. Credit card interchange fee costs have routinely been spread across a range of transactions, such as cash and eftpos payment, which do not use credit cards.

Visa also agreed to pay $2.6 million toward the regulator's court costs, but admitted no liability or act of wrongdoing. The settlement will have no bearing on the Commission's other claims against the banks using the Visa scheme, nor on the case against MasterCard and Warehouse Financial Services in relation to MasterCard's interchange fee rules.

"The Commission considers that this increased transparency will assist retailers and customers in making decision about their payment choices," said chairman Mark Berry in a statement.

"The Commission welcomes Visa's initiative in approaching the commission" and enabling a resolution to be reached, he said.

In 2007, the competition watchdog took action against a number of banks and other related parties over interchange fees, accusing them of fixing prices for the charges in 2004. Credit card transactions for that year were some $19 billion.

It later dropped charges against HSBC finding it had limited involvement and after the other defendants agreed. The Commission never alleged collusion between MasterCard and Visa.

ANZ National Bank, Bank of New Zealand, Westpac Banking Corp, ASB, KiwiBank and TSB Banking, along with MasterCard and Warehouse Financial Services, will be heard in the High Court in Auckland in October.

As part of the settlement, Visa will also open up its network to non-bank institutions provided they meet financial and credential criteria.

Businesswire.co.nz

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