Visa Europe Ltd. plans to "significantly" reduce the fees it sets for processing cross- border credit-card payments in a bid to allay European Union competition concerns, the bloc's antitrust watchdog said.

Visa Europe's offer would bring its fees in line with those of its main competitor MasterCard Inc., the European Commission said today. The operator of the EU's largest payment-card network also committed to overhaul its rules so that banks will be able to apply a reduced cross-border interbank fee when they compete for clients cross-border.

"It will put at the same level the fees that are used by MasterCard and by Visa and this will allow cheaper use of cards that are a payment system used in almost half of our total payments in the EU," Joaquin Almunia, the EU's antitrust commissioner, said in a video statement. Visa Europe's offer will mean "the two big credit and debit card companies" can't use "their market position to have extra profits."

Visa Europe proposed to reduce by 40 percent to 60 percent its so-called interbank fees for credit-card payments to a level of 0.3 percent of the value of the transaction for cross-border and domestic transactions, the commission said. The remedies would last for four years. Visa Europe was sent a formal complaint over the levies last year.

Almunia said antitrust officials will carry out a so-called market test with industry groups before deciding to make the commitments legally binding.

"Merchants will now be able to benefit from centralizing their acquiring in one place, which will bring benefits to the European economy as a whole," said Ruth Milligan, senior adviser on payments at EuroCommerce, a group representing EU retailers including Carrefour SA and Ikea Group. Acquiring banks are those that process card payments on behalf of shops and traders.

"We have long argued that the card scheme's rule on cross- border acquiring were wholly contrary to single market principles and are delighted to see them go," said Milligan.

MasterCard in 2009 in a settlement with the Brussels- based EU regulator agreed to similar fee changes to avoid a daily penalty of as much as 3.5 percent of sales. MasterCard is appealing that decision at the EU courts in Luxembourg. Last month, the EU said it is probing MasterCard's bank fees on foreign card payments such as when tourists go shopping in the 27-nation bloc.

Visa Europe's so-called multilateral interchange fees "harm competition between acquiring banks, inflate the cost of payment card acceptance for merchants and ultimately increase consumer prices," the commission said today.

An earlier probe into Visa Europe's fees for debit-card payments made outside a user's home country was settled in 2011. The company split from Visa Inc. before the U.S. card company's initial public offering in early 2008.

"Today's outcome is the result of constructive dialogue between Visa Europe and the European Commission and is in line with the level of 0.3 percent established in the industry," Peter Ayliffe, Visa Europe's chief executive officer, said in an e-mailed statement.

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