|Vol.7, No.31, 2.8.01, p13
A DECISION to ban Visa card transaction charges could disrupt the launch of the euro, bank workers have warned the European Commission.
Mario Monti, the EU competition commissioner, will soon decide whether to outlaw the 'interchange fee' levied on each Visa purchase by the customer's bank. In a preliminary ruling last year, the Commission said the charge system agreed between Visa International's member banks amounted to price fixing in breach of competition rules.
But an international trade union organisation is warning that a ban during or before the euro launch could cause problems for the changeover. "We want the Commission to delay their decision by a couple of months so that it doesn't have to clash with the changeover period," said Christine Asmussen of the financial sector department at Geneva-based Union Network International. "We don't want to have obstacles to the euro launch - that's the biggest worry of all."
In the first few weeks of the New Year, consumers are expected to rely heavily on their plastic to overcome any lingering currency confusion or supply problems.
But Monti's spokesman, Michael Tscherny, played down the impact the Visa decision could have on the changeover. "I don't necessarily see any such link," he said, but added: "You can be sure the Commission's not going to do anything to upset the introduction of the euro."
Visa International is optimistic the Commission will reverse its preliminary findings, and maintains that a negative decision would affect the currency launch. "It's in everyone's interest that the transition goes smoothly," said spokesman Martin Christie. "The impact of issues such as the decision on interchange will be an important consideration."
Interchange fees are charged to the retailer's bank by the card issuer, and are passed on to the retailer - accounting for 80 of the total transaction charge. Banks argue that a ban would force them to increase charges to cardholders instead, and to issue cards more sparingly.
EU retailers' federation Eurocommerce, which filed the original 1997 complaint, maintains that Visa's profit margins are excessive. "The banks have been successful in imposing this because we don't have sufficient choice in terms of alternatives," said Wynold Verwey, advisor to the retailers. The Visa decision will have major repercussions for other credit card issuers including MasterCard, which is already under EU investigation.
Visa and MasterCard are also defending a lawsuit brought by the US Department of Justice concerning their cross-ownership structure and their alleged non-competitive alliance.
A decision to ban Visa card transaction charges could disrupt the launch of the euro, bank workers have warned the European Commission.
|Business and Industry, Internal Markets