The Australian Competition and Consumer Commission has commenced proceedings in the Federal Court against Visa Inc (Visa), and a number of related Visa entities, alleging contraventions of the Competition and Consumer Act 2010 in relation to dynamic currency conversion services (DCC).
The ACCC alleges that Visa, the operator of the world's largest retail electronic payments processing network, misused its market power for the purposes of:
- preventing the expansion of DCC to new merchant outlets in Australia, such as retail stores; and
- preventing businesses in Australia from supplying DCC services on ATMs in competition with Visa’s own currency conversion service.
The ACCC alleges that Visa earned less revenue when a cardholder selected DCC than when a cardholder used Visa’s own currency conversion service.
“The ACCC is concerned that Visa sought to stop the growth of competing dynamic currency conversion services and, as a result, limit the choices available to consumers,” ACCC Chairman Rod Sims said.
DCC gives international cardholders the choice of completing a transaction in their home currency or in the local currency of the retail store or ATM. If a cardholder chooses DCC, the exchange rate is locked in and disclosed to the cardholder at the time of making a transaction. This provides cardholders with certainty about the exchange rate applied and reduces the risk to cardholders from subsequent changes in exchange rates.
It is alleged in the proceedings that from May 2010 to October 2010, Visa implemented and maintained rules which prohibited the further expansion of the supply of DCC services on point of sale (POS) transactions on the Visa network by its rival suppliers of currency conversion services in many parts of the world, including in Australia. The ban meant that merchants that were not already offering DCC to their customers as at 30 April 2010 could not choose to offer DCC. In effect, this froze the pool of merchants who could offer DCC during the period in which the ban was in force.
It is also alleged that from at least October 2007 to date, Visa has banned the use of DCC on transactions at ATMs using Visa cards in Australia.
The ACCC also alleges that Visa engaged in exclusive dealing, by supplying access to its payment network to Australian banks and in turn, retailers, on condition that they didn’t acquire DCC services from DCC suppliers.
Mr Sims said, “The alleged conduct by Visa gives rise to three concerns for the ACCC. First, it is alleged that travellers to Australia using a Visa payment card do not get to choose who does their currency conversion when withdrawing cash from an ATM. In particular, they are denied the ability to know the cost of transactions in their own currency at the time the transaction is made.
Second, the ACCC alleges that Australian retailers were denied the opportunity to share in the revenue from processing DCC transactions at new merchant outlets.
Finally, it is alleged that Australian suppliers of DCC services were, and continue to be, denied the opportunity to compete with Visa in relation to DCC services at ATMs”, he said.
Mr Sims also said, “Pursuing companies who misuse their substantial market power, to the detriment of consumers and small businesses in particular, as is alleged against Visa in these proceedings, is an enforcement priority for the ACCC”.
The ACCC is seeking penalties, declarations and costs against Visa and the other Visa entities joined as respondents to these proceedings.
The matter has been set down for a directions hearing before Justice Jacobson at 9:30am on 14 March 2013.
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