In the latest row over payment card fees, the European Commission has sent a Statement of Objections (SO) to Visa concerning its multilateral interchange fees (MIFs). The Commission believes MIFs may restrict competition between banks for accepting consumer payment cards, in violation of Article 81 EC.

MIFs are inter-bank fees that apply to point of sale transactions with consumer payment cards. Visa directly sets MIFs, which are paid by the merchants’ banks to the cardholders’ banks for accepting Visa payment cards. Merchants’ banks pass on these MIFs to merchants as part of the price merchants pay for accepting Visa payment cards. In the Commission’s view, MIFs establish a minimum price for accepting Visa payment cards, effectively restricting competition between merchants’ banks, inflating merchants’ costs, and ultimately resulting in higher consumer prices—without any countervailing consumer benefits.

The Commission is also concerned that other rules and practices by Visa may increase the restrictive effects of the MIFs, including the “honour all cards” rule and the “no surcharge” rule, because they limit merchants’ ability to manage their payment costs.

The Commission’s current investigation of Visa follows its challenge to MasterCard’s MIFs, which resulted recently in MasterCard agreeing to reduce temporarily its MIFs, pending resolution of its appeal before the Court of First Instance.