Competition watchdog says Visa fees too high
20 Oct 05
OFT challenges charges to retailers for consumers' use of cards
The Office of Fair Trading (OFT) is claiming that Visa and the major banks are charging too much to retailers when consumers use their credit cards to pay for something.
OFT has issued a "statement of objection" about the fees, to which the organisations involved have to respond before a final decision is made.
The fees are the result of an agreement between Visa and the banks as to what level the usage fee should be. The OFT believes this is contrary to competition law and leads to unduly high fees being paid to the bank that issues a credit card every time it is used.
Known as the interchange fee, the charge applies to most purchases made in the UK using a card and is calculated as a percentage of the transaction. It is paid by the retailer making the sale to the bank that issued the card and passes on to consumers through higher prices in stores.
Colin Grannell, the managing director of Visa UK, said that Visa had agreed a way of calculating its interchange fee with the European Commission and it used the same calculation in the UK. He added that the company did not agree that the fees were too high.