Note: The summary information posted on this Public Register on the nature and objectives of the notifications for decision listed thereunder are extracted from information provided to the CCS by the applicant. The applicant has been consulted on all such summary information posted and the CCS makes no representation as to the accuracy or veracity of the summary information posted.
Visa International Service Association
Case Number: CCS 400/001/06
Date: 3 January 2006
Parties to the agreement as at 3 January 2006
The parties to the Agreement are Visa International Service Association (“Visa International”) and its members. Of relevance to Visa International’s application are the following 10 members of Visa International operating in Singapore:
1. ABN Amro Bank;
2. Bank of China;
3. BNP Paribas Singapore;
4. Citibank Singapore Ltd;
5. DBS Bank Ltd;
6. Malayan Banking Berhad;
7. Oversea-Chinese Banking Corporation;
8. Standard Chartered Bank;
9. The Hongkong & Shanghai Bank; and
10. United Overseas Bank Ltd.
Summary of the nature and objective of the agreement
In the Visa International Network1, the payment by the issuer2 to the acquirer3 of the amount of a transaction using a VISA Card is accompanied by a payment from the acquirer to the issuer, commonly called an ‘interchange fee’. The interchange fee is one of the payments agreed to be made within the Visa International Network when the issuer and acquirer become Members of Visa International.4 The interchange fee (if any) is payable by each member, on a daily basis, during the clearing and settlement process. It is not paid separately by the acquirer to the issuer but is included in the net settlement amount which is debited or credited to a member.
The multilateral interchange fee (‘MIF’) is a mechanism designed to provide incentives to the issuer and acquirer in their joint production of the Visa payment card service for the joint consumption of that service by cardholders and merchants. It is designed to provide a sufficient incentive to ensure that the optimum level of issuing and acquiring among Members is achieved in the Visa International Network. Crucially, the MIF is a mechanism upon which the viability and strength of the Visa International Network has depended and will continue to depend by encouraging both the issuing and the acquiring functions of the network.
The applicants have requested a decision from the CCS that the MIF system does not infringe the section 34 prohibition, or in the alternative, that it meets the net economic benefit exclusion criteria set out under the Third Schedule to the Act.
Notes:
1. Visa International Network means the four-party system (payment card system in which there are four categories of economic agents, including cardholders, merchants, a card issuer and a merchant acquirer, where the payment service is jointly offered by its members that are the card issuers and the merchant acquirers) administered by Visa International in most countries around the world.
2. An issuer is an entity that enlists cardholders for the Visa International Network and issues VISA Cards to them.
3. An acquirer is an entity that enlists merchants for the Visa International Network to accept VISA Cards presented to such merchants.
4. All 10 Members of Visa International operating in Singapore are issuers. In respect of issuers, it should be noted that while ABN Amro is licensed to issue VISA branded payment cards, it is not currently issuing VISA branded payment cards at this time. Further, only 7 of the members are also acquirers. The 7 acquirers are (i) Citibank Singapore Ltd; (ii) DBS Bank Ltd; (iii) Malayan Banking Berhad; (iv) Oversea-Chinese Banking Corporation; (v) Standard Chartered Bank; (vi) The Hongkong & Shanghai Bank; and (vii) United Overseas Bank Ltd.
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