Global payments company Visa may have engaged in anti-competitive conduct in the Australian card payments market through its dealings with large merchants.
The Australian Competition and Consumer Commission issued a statement yesterday saying it was concerned that Visa may have limited competition in the market for debit card acceptance by offering merchants cheaper credit card interchange if they agreed to process dual network debit card payments through the Visa network.
The ACCC said it is concerned that Visa is in a position to “leverage its substantial market power in the credit card acceptance market and limit competition in the debit card acceptance market”.
Visa has given the ACCC an enforceable undertaking in relation to the regulator’s concern. The ACCC said Visa acknowledged its concern but did not make any admission of breaching the competition law.
The undertaking means Visa cannot offer “strategic merchant rates for credit card payments” to merchants on condition that the merchant processes dual network debit card payments through the Visa network.
Since 2017 merchants have been able to choose whether contactless payments made using a Visa branded dual network debit card are processed using the Visa or eftpos payment network (the same applies to Mastercard branded dual network debit cards). This allows merchants to choose the lower cost payment processing option.
There are around 45 million dual network debit cards issued by Visa and Mastercard in Australia.
The ACCC said in a statement that it was concerned Visa could use its market position to limit competition by tying an offer of cheaper merchant rates for credit card transactions to a commitment to process payments via the Visa network.
The ACCC said: “The undertaking ensures that merchants can make decisions about which debit card network processes visa branded dual network card payments without Visa increasing the cost of processing their Visa credit card payments as a consequence.”
Under the terms of the undertaking, Visa will not terminate, withdraw or change a merchant’s credit strategic rate or credit segment interchange rate, or otherwise increase the total costs associated with a merchant’s acceptance of Visa credit payments, following a merchant’s decision to process Visa dual network debit card payments through a network other than the Visa network.
It will not offer a credit strategic merchant rate to a merchant on condition that the merchant processes Visa dual network debit card payments through the Visa network, and will not consider a merchant’s Visa dual network debit card payments volume or processing decisions in assessing that merchant’s eligibility for a credit strategic merchant rate.
Visa will appoint an independent auditor to conduct an annual audit of its compliance with the undertaking.
The head of communications at eftpos, Warwick Ponder, said: “It is encouraging to see merchant choice of payment network being supported by the competition regulator and the creation of a more level playing field for debit card payments in this country.”