Notification for Decision by Visa Worldwide Pte. Ltd. of its Multilateral Interchange Fee system

Case Title

Notification for Decision by Visa Worldwide Pte. Ltd. of its Multilateral Interchange Fee system (“MIF”)

Notifying Date

1 January 2006

Notifying Parties

The parties to the Agreement are Visa Worldwide Pte. Ltd., which is a wholly owned subsidiary of Visa International Service Association (“Visa International”) and its members. Of relevance to Visa Worldwide’s application are the Members of Visa Worldwide operating in Singapore. The current Visa Members are:     

1. Australia and New Zealand Banking Group Limited NZ;

2. Bank of China Ltd;

3. CIMB Bank Berhad;

4. Citibank Singapore Ltd;

5. DBS Bank Ltd;

6. Malayan Banking Berhad;

7. Oversea-Chinese Banking Corporation Ltd;

8. Standard Chartered Bank Ltd;

9. The Hongkong & Shanghai Bank Ltd; and

10. United Overseas Bank Ltd.

Summary of the nature and objective of the agreement

In the Visa Network, the payment by the issuer to the acquirer 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 Network when the issuer and acquirer become Members of the Visa Network The interchange fee (if any) is payable by each member 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 multilaterally determined fee payable by the acquirer to the issuer for a payment card (debit or credit) transaction. It is designed to provide a sufficient incentive to ensure that the optimum level of issuing and acquiring among Visa Members is achieved in the Visa Network. The applicant contends that the MIF is a mechanism upon which the viability and strength of the Visa Network has depended and will continue to depend by encouraging both the issuing and the acquiring functions of the Visa Network. 

The applicant has 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:

Visa Network means the card payment network operated by Visa Enterprise or the Visa Group which is the Visa Inc group of companies.

An issuer is an entity that issues a payment card to a cardholder to facilitate the cardholder’s usage of the payment card.

An acquirer is an entity that has a contract with a merchant to facilitate the merchant’s acceptance of a payment card.

All Members of Visa Worldwide operating in Singapore are issuers.  It should be noted that at the date of the Notification ABN Amro Bank and BNP Paribas Singapore were issuers of Visa Cards but are no longer.   Australia and New Zealand Banking Group and CIMB Bank Berhad have since become issuers of Visa Cards.  In relation to acquiring only five of the Visa Members are also acquirers.  The five acquirers are (i) Citibank Singapore Ltd; (ii) DBS Bank Ltd; (iii) Malayan Banking Berhad; (iv) Overseas-Chinese Banking Corporation Ltd; and (v) United Overseas Bank Ltd.

Decision

On 3 September, CCS issued Visa Worldwide with a Clearance Decision on its MIF system.

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