ACCC takes on Visa for misuse of power on currency exchange rates
The Australian Competition and Consumer Commission alleges that Visa misused its market power here to limit the availability of "dynamic currency conversion".
Dynamic conversion gives foreign credit cardholders the option of converting a purchase into their domestic currency before paying. While this could be more expensive than paying in Australian dollars, the ACCC argues that it offers transparency and locks in a conversion rate at the point of sale. It also gives merchants and banks an opportunity to offer competitive rates.
A spokeswoman said Visa refuted the allegations. "Visa has co-operated fully with the investigation by the ACCC and we strongly reject allegations that our rules on dynamic currency conversion services infringe Australia's competition laws," Zoe Hibbert said.
She confirmed that Visa did not permit dynamic currency conversion at automatic tellers but said it did allow dynamic conversion at the point of sale.
The action is a significant move by the ACCC into regulating payment systems in Australia, an area previously dominated by the Reserve Bank, a partner in competition and regulation at Gilbert and Tobin, Paula Gilardoni, said.
"The fact that they have decided [to take action] signals a departure from that practice and is consistent with [ACCC chairman] Rod Sims's desire to pick up bigger targets," she said.
"If [Visa] lose this case they are prime targets for similar action around the world."
The ACCC has taken action against Visa AP (Australia), Visa Inc, Visa USA Inc and Visa Worldwide in the Federal Court in NSW.
Frequently Asked Questions about this Article…
The Australian Competition and Consumer Commission (ACCC) alleges Visa misused its market power in Australia to limit the availability of dynamic currency conversion (DCC). The ACCC has launched action in the Federal Court in NSW against Visa AP (Australia), Visa Inc, Visa USA Inc and Visa Worldwide.
Dynamic currency conversion (DCC) gives foreign credit cardholders the option to convert a purchase into their domestic currency at the point of sale before paying. The article notes DCC can sometimes be more expensive than paying in Australian dollars, but the ACCC says it offers transparency by locking in a conversion rate at the time of sale and allows merchants and banks to offer competitive rates.
Visa has strongly refuted the allegations, saying it has cooperated fully with the ACCC investigation and denies that its DCC rules infringe Australia's competition laws. Visa confirmed it does not permit DCC at automatic tellers (ATMs) but does allow dynamic conversion at the point of sale.
The ACCC has taken action against Visa AP (Australia), Visa Inc, Visa USA Inc and Visa Worldwide in the Federal Court in New South Wales, according to the article.
The article describes the move as a significant shift because payment systems have been an area previously dominated by the Reserve Bank. Legal experts quoted say the ACCC's action signals a departure from that practice and reflects a push by the ACCC to target larger players in the payments sector.
Yes. The article quotes an expert saying that if Visa loses this case they could become prime targets for similar regulatory action in other countries, making the company vulnerable to additional litigation globally.
In this context the ACCC alleges Visa used its dominant position in payment networks to limit how widely dynamic currency conversion is available in Australia. The complaint centers on the claim that Visa's rules restricted the ability of merchants and banks to offer or enable DCC choices to cardholders.
The article suggests investors should monitor the court case and regulatory developments because a ruling against Visa could increase legal and regulatory risk for the company and possibly prompt similar actions internationally. Visa has so far denied the allegations, so following official court proceedings and company updates will show how material the issue may be for investors.
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