Anti-trust lawCommission introduces Interchange Fee Regulation to boost card payment transparency

As of today, new rules of the 'Regulation on Interchange Fees for Card-based Payment Transactions' come into force. With this, the European Commission aims to make the payment card market more efficient and address the problem of widely varying and excessive interchange fees for consumers and retailers in the EU. When customers pay with credit or debit cards, the retailer or the acquiring bank has to pay an interchange fee to the issuing bank that issued the consumer’s card. This fee is deducted from the final amount that retailers receive.

The provisional regulatory set from December 2015 introduced caps on interchange fees. Since then, the following changes were added:

  • Free to choose preferred payment type: Many payment cards have multiple brands (“co-badging”) offering different payment options. Previously, the preferred brand was selected by the issuing bank such that high interchange fees could be collected. The new rules enable consumers to select the most cost-efficient brand for their payment card themselves.
  • One card for all: So far, consumers had to use multiple cards for different card products from their banks. As of now, consumers are able to oblige their bank to co-badge a single card (or in the future mobile phones) offering all payment types at once (e.g. Visa, MasterCard, Maestro or American Express).
  • Better information to consumers: All retailers are required to display clearly and unequivocally at the shop entrance and at the check-out which cards they accept. For online sales, this information must be presented on the website or on other electronic or mobile devices.
  • Know what you pay for: Interchange fees are paid indirectly by retailers and passed on to consumers through higher prices. Until now, banks charged "blended" fees for card transactions using different brands with varying fees. The new rules provide more transparency, since banks will have to specify fees for each transaction to the retailer.

Margrethe Vestager, EU-Commissioner in charge of competition policy, commented as follows: "Many consumers use payment cards every day when they buy in shops or online. For years, the fees charged by the banks for these card payments were largely kept in the dark even though the costs are ultimately paid by consumers. The Interchange Fee Regulation has capped these fees and made card payments more transparent. This means lower costs to the benefits of millions of European consumers and retailers."

Source: European Commission

More information and factsheet on interchange fees