Under the proposed commitments, Visa Europe will cap its weighted average intra-regional MIF for immediate debit transactions at 20 basis points (0.2 percent) for four years. The same cap will apply to domestic immediate debit rates that defaulted to the intra-regional MIF rate before 10 March 2009 and continue to do so, and to domestic immediate debit rates set directly by Visa Europe. Many of these countries have their own arrangements for setting domestic interchange or have few immediate debit card transactions, therefore the overall impact is limited. The commitment to a cap to Visa Europe’s immediate debit MIF is calculated under the so-called “merchant indifference” test, developed in recent economic literature. In particular, the Commission has calculated the EEA wide immediate debit cap by averaging the results of two central bank studies conducted in the Netherlands (in 2005) and Sweden (in 2007) measuring the costs of cash and card payments in their respective countries. As the data on which the Commission has based its current calculations are incomplete, and do not yet include all relevant cost categories, the commitments set out a clear mechanism for revising the 0.2 percent cap when further data becomes available. The European Commission has already launched a pan-European study on the costs of different payment methods. Visa Europe has been sharing its know-how in the development of such studies with the Commission and has provided the Commission with a detailed list of points it considers should be taken into account in any robust and reasonable cost study. The proposed commitments note that Visa Europe will be further consulted on the Commission’s methodology going forward. Visa Europe looks forward to working closely with the European Commission in this regard. The proposed commitments highlight the importance of establishing a common methodology which can be used by competition authorities across SEPA to calculate MIFs for immediate debit transactions in their local jurisdictions, and will establish a level playing field for all four party debit card systems operating in Europe. The proposed commitments relate to MIFs for immediate debit transactions only and do not affect credit, deferred debit or commercial MIFs. The application of the so-called “merchant indifference” test to credit and deferred debit transactions is considerably more complicated in circumstances where cash is not a realistic alternative to credit. Visa Europe and the European Commission will continue their ongoing discussions on these complex issues in the coming months with a view to reaching an agreed outcome. Pending the outcome of these discussions, Visa Europe’s MIFs for intra-regional credit and deferred debit transactions will remain unchanged. www.visaeurope.com