By Elizabeth Hearst
Visa, the world’s largest card payments processor, is currently under investigation by the European Commission over its regulations on electronic money providers.
The investigation surrounds allegations that the multinational organisation has behaved in an anti-competitive way, according to The Times.
Concerns surrounding the payments giant and its relationships with financial technology start-ups have been voiced by industry insiders, who believe that these Fintechs are offering fast payments to customers, which make it increasingly difficult for Visa to review transactions for money laundering and fraud.
The card payment processor revealed that an investigation was launched in June by the European Commission, and stated that the company was co-operating with the inquiry.
As the world’s largest card payments business by value it provides a global payment system, as well as granting licences to digital wallet providers such as PayPal and Apple Pay. These “electronic money” providers require that customers “top-up” their accounts prior to making purchases. It’s estimated that over 440 Million customers use Apple Pay annually, in comparison to PayPal’s 346 Million customer base.
Visa, in conjunction with various other payment companies, issue licences for smaller companies to use their networks. These licences are only issued when a company can satisfy its anti-money laundering requirements, as well as other vital checks that it can guard against any potential fraud and criminality.
The fall-out of the Wirecard scandal has highlighted the importance of these licences and regulatory checks after it emerged that there was a €1.9 Billion hole in the company’s accounts and major financial irregularities were recorded. This scandal sparked fears that Visa and its competitor Mastercard could revoke Wirecard UK’s licences, which could potentially affect thousands of its UK-based customers.
It is reported that Visa and other financial institutions including banks have been accused of trying to stem the growth of e-money providers. These e-money providers have threatened Visa’s market share, as they entice customers away from traditional methods and companies to online competitors.
A spokesperson for Visa told The Times: “We are working with a wide variety of fintechs and start-ups to provide them open access to our global network. We welcome new solutions and new ways for people to make electronic payments and for merchants to accept them, subject always to delivering the security and convenience that our customers expect from Visa.”
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