Visa 2008 Annual Report Download - page 24

Table of Contents
Department of Justice, or DOJ, to oversee collective merchant negotiations with the Company and its customer financial institutions (and separately with
MasterCard and its customer financial institutions) and report results of those negotiations back to the U.S. Congress. Similar legislation to the Credit Card
Fair Fee Act has been introduced in the U.S. Senate Judiciary Committee, but there have not been any hearings on, or further movement of, such legislation.
Additional interchange legislation also has been introduced in the House, but there have been no further developments with respect to such legislation. In
addition, the U.S. House of Representatives has passed a bill that would commission a study by the Federal Trade Commission of the role of interchange fees
in alleged price-gouging at gas stations. Individual state legislatures in the United States are also reviewing interchange fees, and legislators in a number of
states have proposed bills that purport to limit interchange fees or merchant discount rates or to prohibit their application to portions of a transaction. In
addition, the Merchants Payments Coalition, a coalition of trade associations representing businesses that accept credit and debit cards, is mounting a
challenge to interchange fees in the United States by seeking legislative and regulatory intervention. The Committee on the Judiciary of the House of
Representatives has approved legislation supported by the Merchants Payment Coalition that would provide antitrust immunity to permit merchants to
collectively negotiate with Visa and the banks that issue and acquire Visa cards.
Interchange fees and related practices also have been or are being reviewed by regulatory authorities and/or central banks in a number of other
jurisdictions, including the European Union, Australia, Brazil, Colombia, Germany, Honduras, Hungary, Mexico, New Zealand, Norway, Poland, Portugal,
Romania, Singapore, South Africa, Spain, Sweden, Switzerland, the United Kingdom and Venezuela. For example:
• The Reserve Bank of Australia has made regulations under legislation enacted to give it powers over payments systems. One of the regulations
controls the costs that can be considered in setting interchange fees for Visa credit and debit cards, but does not regulate the merchant discount
charged by any payment system, including competing closed-loop payments systems. In 2007, the RBA commenced a review of these regulations
and in September 2008 released its Final Conclusions. These indicate that the RBA is considering imposing additional restrictions that could
further reduce the domestic interchange fees of four-party payments systems and/or impose additional regulatory constraints on certain Visa
practices, such as Visa's "honor all cards" rule.
• New Zealand's competition regulator, the Commerce Commission, filed a civil claim alleging that, among other things, the fixing of default
interchange rates by Cards NZ Limited, Visa International, MasterCard and certain Visa International member financial institutions contravenes
the New Zealand Commerce Act. A group of New Zealand retailers filed a nearly identical claim against the same parties before the same
tribunal. Both the Commerce Commission and the retailers seek declaratory, injunctive and monetary relief.
• In March 2006, Banco de México, the central bank of Mexico, reached an agreement with the Mexican Banks Association to implement a new,
value-based interchange methodology. As part of Banco de México's transparency policies, details of the new interchange rates have been
publicly disclosed and are available on Banco de México's website.
• In December 2007, the European Commission adopted a decision that MasterCard's multilateral interchange fees for cross-border payment
transactions within the European Economic Area violated European Community Treaty rules on restrictive business practices and must be
withdrawn within six months.
Regulatory actions such as these, even if not directed at us or if affecting a geographic region in which we do not operate, may nonetheless increase
regulatory scrutiny of interchange fees. If we cannot successfully defend our ability to set default interchange rates to maximize system volume, our payments
system may become unattractive to issuers and/or acquirers. This result could reduce the
23