Australia’s competition watchdog is taking Visa, the world’s largest electronic payment network, to court for misuse of market power.
The case is about currency conversion when foreign credit cards are used for purchases in Australia.
The credit card company allegedly banned Australian retailers from using any other currency conversion system, and that visitors in Australia were forced to use Visa’s currency conversion when withdrawing cash at automatic tellers.
‘‘The Australian Competition and Consumer Commission 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,’’ chair Rod 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 did 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 transaction 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 [currency conversion] at new merchant outlets’’.
The ACCC has taken action against VISA AP (Australia), VISA Inc, VISA USA Inc and VISA Worldwide Pty Ltd, in the Federal Court in New South Wales. It is seeking penalties against Visa and declarations all the companies ‘‘took advantage of its substantial degrees of market power in the international payment card network,’’ according to court documents.
If the court finds Visa did breach Australian laws, it could be fined up to $20 million, or the court could fine it 10 per cent of its revenue in Australia, or the amount of money Visa gained from the breaches.
Last year the ACCC successfully took on another American company - Apple Inc - for misleading Australian consumers with the name of its new tablet device, which was called WiFi + 4G, but could not operate on Australia’s 4G networks. Apple later changed the name of the device around the world.
In this case, Visa has allegedly banned alternative currency conversion services at Australian automatic tellers since late 2007. And that since April 2010 Australian shops could only use Visa’s payment system or accept Visa credit cards if they agreed to only use Visa’s currency conversion.
The alternative for retailers would have been to use another currency conversion service, which can help generate revenue for the store.
Visa said today it would ''vigorously defend itself against claims by the ACCC that our rules on Dynamic Currency Conversion [DCC] infringe Australia's competition laws''.
While Visa confirmed it does not permit currency conversion at automatic tellers, it claimed it does permit it at point of sale.
"Visa has co-operated fully with the investigation by the ACCC and we strongly reject allegations that our rules on DCC services infringe Australia's competition laws,'' spokeswoman Zoe Hibbert said.