Industry News

Update On EU-Wide Interchange Cap

Early this year the European Union (EU) agreed new rules that form part of the drive for a more competitive EU-wide financial services industry. Interchange Fee Regulation comes into force on the 9th December 2015, benefiting both consumers and businesses alike.

Interchange fees are typically paid by the retailer’s bank to the cardholder’s bank every time a credit or debit card is used. This charge (a percentage of the transaction) historically has been hidden from the consumer, and until now could vary depending on the cardholder’s bank and the payment card used.

The new rules will affect both domestic and cross-border European transactions providing a more transparent single market for retailers and consumers across the EU. One of the aims of Interchange Fee Regulation is to equate credit and debit card transactions with taking cash payments, ensuring that neither payment method is more expensive for merchants than the other.

With almost 10.7 billion credit and debit transactions in Britain in 2013 alone, the British Retail Consortium has estimated that the agreement could save British businesses up to £480 million a year.

In brief the new EU Interchange Fee Regulation does the following:

  1. Caps interchange rates for consumer payment cards within Europe at a maximum of 0.20% for debit transactions and 0.30% for credit transactions. This is initially only for cross-border transactions, but will be applied to domestic transactions after two years,
  2. Levels the European acquiring market by allowing cross-border acquirers access to lower interchange rates for domestic transactions,
  3. Bans surcharging on transactions which fall under the new capped interchange fees,
  4. Increases the transparency of payment costs to merchants and consumers,
  5. Allows merchants to accept more payment methods by offering customers their preferred payment card, without increasing costs.

Interchange fees apply for consumer cards, not commercial cards, at both Point of Sale and for eCommerce transactions. Intra-EEA capped fees apply to cross-border transactions where the issuer country and merchant country are both in the EEA region. The Intra-EEA region includes the 28 member states of the European Union.

Consumer Card Interchange Fees as of 9th December 2015

Country Credit / Debit card Channel Interchange rate
Austria Credit / Debit POS 0.30%
Czech Republic
Estonia eCommerce
Italy POS 0.20%
Portugal eCommerce
United Kingdom

* Capped interchange fees only apply to consumer cards, not commercial cards used by businesses for expenses.

As of 9 December 2015 the following countries and territories are not part of EEA anymore: Andorra, Monaco, San Marino, Holy See (Vatican City), Antarctica, Greenland, Faroe Islands, Saint Barthelemy, Falkland Islands, Guernsey, Isle of Man, Jersey, Saint Helena, Ascension and Tristan Da Cunha, South Georgia and the South Sandwich islands.

What Do These Changes Mean For Secure Trading’s Customers?

As Visa and Mastercard implemented the new capped interchange rates earlier this year, the transition for our customers has already started. From 9th December these interchange rates will be applied across all credit and debit card transactions within the EEA; and merchants will be able to start benefiting from the additional EU cross-border trade we hope these new regulations will bring.

New Visa Brand Mark

Visa has introduced a new Verified by Visa (VbV) brand mark which should be used when displaying support for VbV and the VbV learn more option on your web site, payment pages and any associated marketing collateral by the 31st October 2015.

You can download the latest hi quality VbV logos for your website from our brand centre using the following link.

New VbV brand marks for merchant websites and payments pages can be seen below:

Verified by Visa logo Oct 2015

New VbV brand mark for online applications with “learn more” link can be seen below: