Introduction

All forms of payment cards (credit, debit, charge, etc.) are gradually becoming the most popular non-cash payment instrument all around the world. In Europe alone, there were more than 450 million cards in 2005, accounting for more than €1.5 trillion in transaction volume. A payment card system provides a convenient way for consumers to pay merchants (e.g. retailers). In principle, the system could charge consumers, who gain convenience, and/or merchants, who gain customers attracted by the ability to pay conveniently. Alternatively it may subsidise one and charge more to the other. Because both consumers and merchants buy into the system as a way to trade with each other, this structure is called a ‘two-sided market’. Even though the two largest payment card systems, MasterCard and Visa, have recently decided to become for-profit corporations, they were initially set up as not-for-profit associations of several thousands of banks. In many countries, domestic debit card systems are also organised as not-for-profit associations of banks.

Within a payment card system, access charges (known as interchange fees) are levied between the cardholder's bank and the merchant's bank. Interchange fees are collectively determined at the network level. This collective determination, as well as other rules (honour-all-cards, no discrimination), has been challenged by retailers' associations, antitrust authorities and regulators in several regions of the world (US, Israel, UK, EU, Australia). This chapter focuses on one of these cases: DG Comp case 29.373-Visa International.