OFT slams ‘too high’ Visa fees
The Office of Fair Trading (OFT) stepped up its assault on British banks yesterday, announcing an in-depth inquiry into Visa fees.
The investigation relates to so-called “interchange fees” which are levied by high street banks on retailers when they process Visa credit card transactions.
In a related investigation into Mastercard fees, the OFT last month found that interchange fees had been deliberately set too high, with banks pocketing profits over and above the cost of processing the transaction. According to the British Retail Consortium, “interchange fees” generate more than £1.4bn a year for the high street banks. Of this £500m relates to Mastercard transactions, with the rest charged by Visa.
When the OFT found against Mastercard in September, the regulator called interchange fees a “tax on consumers” and said that British shoppers were being overcharged by around £100m a year. Visa has 42.8m cardholders in Britain, almost double the number of Mastercard holders, and €127.6bn is spent on Visa cards annually. The OFT issued a “statement of objections” which set out its preliminary case against Visa. The regulator said it believed Visa was in breach of competition law.
Visa, which will now have a chance to put its case, said it does not believe interchange fees are unduly high. The organisation, of which all the British high street banks are members, also believes that its process was cleared by a European Commission investigation three years ago. It does not believe that the OFT should look at the issue again.
The Mastercard investigation was the OFT’s longest, most expensive probe, but the regulator’s tough policy is popular with consumers.