ACCC takes on Visa for misuse of power on currency exchange rates
VISA says it will "vigorously defend itself" against legal action by Australia's competition watchdog that makes it vulnerable to more litigation by regulators around the world.
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.