The European Parliament has approved a proposal for a Regulation on Interchange Fees for Card-based Payment Transactions. What is such an “interchange fee”? When a customer pays for a purchase in a store using a credit or debit card, the bank that serves the store (the "acquiring bank") pays a fee to the bank that issued the payment card to the consumer (the "issuing bank"). The interchange fee is then deducted from the final amount that the store merchant receives from the acquiring bank for the transaction. The aim of the regulation is to establish transparent fee-capping rules for cross-border and domestic retail purchases, thereby reducing the amount of hidden fees for consumers. As a general rule, the Regulation will cap interchange fees at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards. For domestic debit card transactions the 0.2% cap will only apply after a five-year transition period. For smaller domestic debit card transactions, Member States may also set a maximum fixed fee of €0.05 per transaction, after the five-year transition period. For credit card transactions, likewise, Member States may set a lower fee cap for domestic credit card transactions.
For now the new rules will not apply to so-called “three-party” card schemes such as Diners and American Express (involving only one bank) provided the card is both issued and processed within the same scheme. Commercial cards used only to pay business expenses will also be exempt.
The capping rules do not affect ATM cash withdrawals.
What is next? The document is to be endorsed by the Council of Ministers.