Officials at Visa Europe expect a sharp reduction in debit card transaction fees will prevent further investigation into the payment platform's business practices, according to a report in the Wall Street Journal. Under a new agreement with European Union regulators, the company will command no more than a 0.20% of transaction amounts when processing signature debit purchases.
Visa Europe, like its American counterpart, coordinates the transfer of funds from buyer to seller in transactions that can include as many as seven parties. Besides merchants and purchasers, merchant banks, receiving banks, and gateway operators all rely on Visa for security and stability. They also garner significant interchange fees of up to 4% combined, a practice that has attracted attention from antitrust regulators in both Europe and the United States.
While Visa Europe's action may put an antitrust probe of its debit services to rest, E.U. officials continue to examine its credit card processing services. In addition, merchants have started to question the value of high transaction costs, especially with the widespread adoption of lower-cost, lower-risk debit and PIN-based transactions.
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Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.