Visa facing ACCC action over currency conversion
VISA will "vigorously defend itself" against legal action by Australia's competition watchdog that makes it vulnerable to further litigation by regulators around the world.
The Australian Competition and Consumer Commission alleges Visa misused its market power in Australia to limit the availability of "dynamic currency conversion".
Dynamic conversion gives foreign credit card holders the option of converting a purchase into their home currency before paying. While it could be more expensive than paying in Australian dollars, the ACCC argues it offers transparency and locks in a conversion rate at the time of purchase. It also gives merchants and banks an opportunity to provide competitive rates.
A spokeswoman for the credit card company said it rejects 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," spokeswoman Zoe Hibbert said.
She said Visa does not permit dynamic currency conversion at automatic tellers, but does allow it at point of sale.
The action is also a significant move by the ACCC into regulating payment systems in Australia, an area previously dominated by the Reserve Bank, according to a partner in competition and regulation at Gilbert and Tobin, Paula Gilardoni.
"The fact that they have decided [to take action] signals a departure from that practice and is consistent with Rod Sims' desire to pick up bigger targets," she said.
Ms Gilardoni added Visa's rules in Australia are used globally and that "if [Visa] lose this case they are prime targets for similar action around the world".
The ACCC alleges that for five months in 2010 Visa prevented the expansion of dynamic conversion in Australia, denying businesses - such as duty-free shops - the opportunity to make money by offering conversion services. Visa also refused ANZ and Westpac banks permission to offer dynamic conversion at their automatic teller machines, according to a statement of claim lodged with the Federal Court in New South Wales.
The alleged behaviour affected tourists visiting Australia, businesses that benefit from tourism, and financial companies providing conversion and merchant services.
"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," chairman Rod Sims said.
The ACCC has taken action against Visa AP (Australia), Visa Inc, Visa USA Inc and Visa Worldwide Pte Ltd, in the Federal Court in New South Wales. A hearing has been set for March 14 in Sydney.