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MAP Launches an Investigation against VISA
// // MasterCard will be called as a witness
Last Friday, the Ministry for Antimonopoly Policy (MAP) announced it was launching an investigation into the activities of the Visa international payment system in Russia with the support of the Bank of Russia and the Association of Russian Banks (ARB), which offered whatever help was in their power. Along with Visa, MAP will also be checking the activities of its main competitor, the MasterCard payment system.
Competition
At the end of last week deputy minister of MAP Andrei Kashevarov, first deputy chairman of the Central Bank Andrei Kozlov, and president of ARB Garegin Tosunyan met at ARB to discuss Visa’s activities in Russia. The reason for the meeting was a complaint to MAP from the president of Uralvneshtorgbank (UVTB), Valerian Popkov, who believed that Visa was violating a number of provisions of the law on competition on the financial services market. In his complaint, Valerian Popkov asked that Visa be obliged to make its regulations public and to translate them into Russian (see Kommersant of January 20).
The dispute between UVTB and Visa began last year when, according to the bank’s statement, the payment system started protracting the process of certifying it to issue plastic cards without giving an official explanation of its position, whereupon Valerian Popkov accused Visa of threatening Russia’s national security. In order to understand the situation, MAP decided to consult the banking association. And as Andrei Kashevarov said after the meeting, “both the Central Bank and ARB said it was necessary to look into the matter.” As a result, according to an official MAP press release, “based on the discussions, MAP of Russia has decided to conduct an antimonopoly investigation of Visa with the participation of the Bank of Russia and ARB.”
MAP plans to investigate whether there are barriers to banks joining Visa and how Visa’s existing membership regulations and demands affect the banks’ participation in other payment systems. Andrei Kashevarov explained to Kommersant that MAP had questions for Visa not only regarding translation of its regulations into Russian, but also on Visa’s mandatory requirements for business plans from banks when granting a permit to issue cards. In order to fulfill these requirements, in a number of cases, the banks were forced to withdraw from other payment systems. “Isn’t Visa carrying out this anticompetition policy to exclude other payment systems from banks?” Andrei Kashevarov asked himself. He also considers it an abnormal situation “when a bank can see Visa’s regulations only after paying a membership fee. The bank is effectively entering a ‘black box’.”
“We’re also interested in some aspects of Visa’s documents,” Garegin Tosunyan told Kommersant. According to Mr. Tosunyan, MAP has asked the association to act as consultant in the investigation. He also noted that, “the Bank of Russia rightly pointed out that we have a choice of either forcing the development of a national payment system or continuing to prefer the development of international payment systems.” However, Kommersant was unable to learn exactly what claims the Central Bank had against Visa.
There were no Visa officials present at the meeting at ARB, because the head of Visa’s representative office, Lou Naumovskyy was not in Russia. Andrei Kashevarov explained MAP’s unwillingness to postpone the discussion by saying that, “otherwise we never would have met, but we needed official procedures to enter into correspondence with Visa.” He added that MAP would also enter into correspondence with another widely represented payment system in Russia, MasterCard. “Visa will not be alone; it will have MasterCard for company,” Andrei Kashevarov promised Kommersant.
MasterCard’s Russian representative office did not comment on MAP’s announcement. Visa’s Russian representative office responded to MAP’s claims by issuing an official press release. As Interfax reported, the press release states that Visa is prepared to discuss all issues regarding its activities in Russia with all interested agencies and organizations. “More than anyone, Visa is interested in clearing up all misconceptions, ambiguities, and misunderstandings concerning membership regulations and demands made on the banks,” declares the press release.
Kommersant will be following the development of events.
Kirill Yacheistov
All the Article in Russian as of Mar. 01, 2004
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Photo: Sergei Tyunin
