On 19 May 2015, the European Union has taken the last step towards capped interchange fees for card-based payment transactions by publishing Regulation (EU) 2015/751. The Regulation follows a number of antitrust investigations into MasterCard’s and Visa’s multilateral inter-change fee (MIF) by the European Commission and national competition authorities (such as in Germany, France, UK, Italy and Poland).
Effectiveness of caps
With effect from 9 December 2015, the Regulation will cap interchange fees at 0.2 % of the transaction value for consumer debit cards and at 0.3 % for consumer credit card transactions. For domestic cards (debit and credit), Member States will be able to define lower per transaction interchange fee caps.
In addition, the Regulation includes certain rules on conduct that are designed to promote com-petition and enhance consumer protection. These rules have to be applied by market partici-pants from 9 June 2016. Examples are the prohibition of territorial restrictions, the requirement that payment card schemes and processing entities are separated in accounting and organisa-tional terms and provisions on co-badging.
Three party payment card schemes (such as American Express and Diner) are exempted from the new rules for the next three years and will have to comply with the Regulation starting from 9 December 2018. In addition, the Regulation does not apply to transactions with commercial cards, i.e. payment cards that are limited in use for business expenses of undertakings, public sector entities or self-employed natural persons.
As proposed by the second Payment Services Directive (PSD2), surcharges for card-based payment transactions will likely be banned. Following the adoption of PSD2 and its transposition by the Member States (expected for mid-2017), merchants will no longer be allowed to surcharge consumers for using their payment card. The European Commission argues that such surcharges will no longer be justified after interchange fees are capped by the Regulation because merchants’ costs for card-based transactions will reduce.
Parties will have to bear in mind that a circumvention of the caps might violate the Regulation. As for any other infringements of the Regulation, Member States are obliged to lay down rules on penalties and take all measures necessary to ensure that they are applied.
Please contact us if you require further information about this topic or would like to make sure that your company complies with the new Regulation.