The European Commission today announced Visa Europe offered to cap its credit card interchange fees at 0.3 percent of the transaction value for at least the next four years. Visa’s offer reduces rates to equal MasterCard’s, and it hopes the gesture will end the commission’s investigation into its activities as well as help it avoid a hefty fine.
The commission highlighted in a statement Visa’s proposed interchange cap is 40 to 60 percent lower than they currently stand, and apply to both domestic and cross-border fees. Visa’s profits would take a substantial cut. In addition to the cap, Visa also proposed reforming its operating rules, making it simpler for businesses to seek more cost effective cross-border transaction deals from different banks. However, before the commission decides whether to accept Visa’s offer, it is asking for comments from all interested parties in order to make an informed decision.
Visa’s proposed changes follow discussions from European Union regulators last week which could potentially see the end of interchange fees entirely across the 27-member bloc. With Visa accounting for about 41 percent of all payment cards issued, potentially removing all forms of interchange fees would significantly hurt its bottom line.
