Visa Worldwide, a subsidiary of Visa Inc, has been fined $18m by the Australian Competition and Consumer Commission (ACCC), after it illegally froze out a competitor within the currency-converter market.
The ACCC claim that during the period 1st May 2010 to 6th October 2010, Visa Worldwide engaged in the temporary prohibition of Dynamic Currency Conversion (DCC), a rival service which allows international travellers in Australia to pay for items in their home currency.
Visa did this by changing its own rules regarding the ‘‘further expansion of the supply of DCC services on POS transactions on the Visa network by its rival suppliers of currency conversion services in many parts of the world, including in Australia.’’
This ‘freezing out’ of DCC’s services meant that the currency firm couldn’t expand into growing markets, including the retail and hospitality sector. As at 30th April 2010, potential customers were prohibited to sign up to DCC.
Rod Sims, chairman of the ACCC, feels that the fine is a ‘‘clarion call’’ to all large international businesses operating in Australia, with a company statement declaring that Australia will not tolerate conduct from any firm that will harm the competition.
“Unlawful conduct which prevents or hinders the competitive process in concentrated industries and restricts consumer choice are priority areas for the ACCC,” explained Sims.
“The ACCC was concerned that Visa’s conduct was likely to stop the growth of currency conversion services which competed with its own and, as a result, limit the choices available to consumers.”
The ACCC has also demanded that Visa Worldwide pay an additional $2m, in order to cover the costs of the watchdog’s case against them.
“The substantial penalty imposed against Visa Worldwide reflects the serious nature of the conduct, which hindered the competitive process and restricted an emerging technology and service from developing under otherwise competitive market conditions,” continued Sims.
Fine and fine again
This is not the first time that an international payment company has been fined by a competition watchdog.
The Consumer Financial Protection Bureau (CFPB) has issued two hefty penalties this year, the first being a proposed $25m fine to PayPal in May, with the payments system being found guilty of illegally signing up its customers to its credit card service.
In July, the CFPB slapped a whopping $700m fine on Citi Bank, demanding that the organisation refund its customers after it’s ‘‘deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products.’’
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