Release no 16, Issued 12 August 2009
The Commerce Commission has signed an agreement with the Visa International Service Association and Visa Worldwide Pte Limited (Visa) settling the Commission’s claims against Visa in relation to credit card interchange fees. The Commission’s proceedings allege that the rules of the Visa scheme providing for the payment of multilateral interchange fees, together with related rules, breached the restrictive trade practices provisions of the Commerce Act.
As a result of the agreement, Visa will make changes to the way the Visa scheme rules will apply in New Zealand. Those changes are:
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Creditcard issuers will now be able to individually set the interchange ratesthat will apply to transactions using their credit cards, subject tomaximum rates determined by Visa. These rates will be publiclyavailable. -
Merchantswill no longer be prevented from applying surcharges to payments madeby credit cards or by specific types of credit cards. Merchants willalso be able to encourage customers to pay by other means. -
Visahas confirmed that non-bank organisations or companies who might wishto provide acquiring services to merchants are permitted to join theVisa network as acquirers if they meet relevant financial andprudential criteria.
“The Commission considers that the agreed changes to the Visa rules will, over time, improve competition between companies that provide credit card services to retailers in New Zealand. Those changes are in the long-term best interests of both New Zealand consumers and retailers,” said Commerce Commission Chair Dr Mark Berry. “The Commission considers that this increased transparency will assist retailers and customers in making decisions about their payment choices.” “The Commission welcomes Visa’s initiative in approaching the Commission with a forward looking resolution to the competition concerns that the Commission’s claim raised. This has enabled a resolution to be reached which supports the Commerce Act’s goal of promoting competition for the long term benefit of New Zealand consumers,” said Dr Berry. The agreement also reinforces the Commission’s stated approach to resolving issues in the most timely, cost-effective way.
Visa has agreed to contribute NZD 2.6 million towards the Commission’s costs to date in bringing these proceedings.
On the basis of the settlement agreement the Commission will be seeking leave to discontinue its proceedings against Visa in the High Court.
The Commission’s claims against ANZ National Bank Limited, Bank of New Zealand, Westpac New Zealand Limited, ASB Bank Limited, Kiwibank and TSB Bank Limited in relation to interchange fees in the Visa scheme continues, as does its claim against those banks, MasterCard and The Warehouse Financial Services Limited in relation to the MasterCard rules. The Commission’s remaining claims will be heard at the High Court in Auckland in October this year.
The Commission will be making no further comment at this time, due to the remaining claims yet to be heard.
A public version of the settlement agreement can be found attached to this media release on the Commission’s website.
International action on interchange fees. Interchange fees have been scrutinised by many international regulatory agencies. In 2003, the Reserve Bank of Australia moved to regulate the level of interchange fees, reducing the fees over time from 0.95 per cent of transaction value to less than 0.50 per cent. Public and private competition enforcement actions have also been brought in respect of interchange fee arrangements in numerous jurisdictions, including the United States and the UK.
