The ongoing saga between Visa and the European commission looks like it’s finally coming to a close. The story goes back to July 2012, the European Commission initiated proceedings against Visa Europe with regard to the company’s policy on Multilateral Interchange Fees (MIFs) for consumer credit cards. The EC was concerned that Visa’s fee policy may have violated EU antitrust rules.
One of the EC’s concerns is related to the cross-border acquiring rules that limited the possibilities for merchants to benefit from fees of banks not domiciled in the merchant’s home country. Visa’s policy obligated acquiring banks to apply the interchange fees of the country where the merchant is located rather than the fees applicable to the acquirer’s home country even if they are lower. Visa’s cross-border interchange fee policy and the wide divergence between MIF levels of EEA countries hampered price competition between acquiring banks and limited cross-border competition, while restricting the ability of merchants in high MIF countries to obtain lower fees.
As a result of the EC’s objections and after many years of discussions, Visa Europe has introduced the Cross Border Domestic Interchange Program (CBDIP) which is scheduled for launch on January 1st, 2015.
The CBDIP will enable cross border acquirers to apply either the domestic MIF rate of a merchant’s home country or a reduced rate of 0.2% for Visa debit cards and 0.3% for Visa credit cards for domestic transactions where the following conditions are met:
- The acquirer is a European cross-border acquirer
- The acquirer has an interchange ++ billing structure
- The ability to identify transactions with a Single Merchant Identifier
- Merchants with only secure transactions may qualify for the CBDIP MIFs (EMV, contactless, 3D, Verified by Visa, V.me by Visa or other equivalent secure Visa Europe technology which may be developed in the future)
- Registration to the program on a per-merchant basis is required.
This new program will benefit merchants with a presence in countries which currently have high credit card MIFs by allowing them to obtain lower rates.
As a European cross-border acquirer, Credorax has already signed up for the CBDIP program with Visa. We are currently investigating the potential impact on merchants and who can benefit most from this upcoming change. We will update our partners and readers as more information becomes available.