Multilateral interchange fees for payments in the EEA with consumer cards issued elsewhere will be changing by October 2019.
The changes have been driven by the EU to reduce the cost of accepting cards issued in another country for example USA but accepted in the UK.
This transaction has additional fees for being a cross boarder payment.
The Mastercard and Visa networks set the level of MIFs (including inter-regional MIFs) applied by their licensee banks between them. In the absence of bilateral agreements between the banks, the level of the MIFs set by Mastercard or Visa networks applies by default. Retailers and consumers have no means of influencing the level of MIFs.
Both Mastercard and Visa have now committed to reduce their respective inter-regional MIFs. These commitments, which will cut the inter-regional MIFs by on average 40%, will significantly reduce the costs for retailers in the EEA when they accept payments made with cards issued outside the EEA. This is expected to lead to lower prices to the benefit of all European consumers.
The Commission is the first competition authority in the world to intervene on inter-regional MIFs.
The Commitments
Mastercard and Visa, each separately, offered commitments that would reduce the inter-regional MIFs by an average of 40%. Under the commitments, each of Mastercard and Visa undertake to:
1) Reduce the current level of inter-regional interchange fees to or below the following binding caps, within six months:
- For card payments carried out by the cardholder in a shop ("Card Present Transactions"):
o 0.2% of the value of the transaction for debit cards;
o 0.3% of the value of the transaction for credit cards.
- For online payments ("Card Not Present Transactions"):
o 1.15% of the value of the transaction for debit cards;
o 1.50% of the value of the transaction for credit cards.
2) Refrain from circumventing these caps by any measure equivalent in object or effect to inter-regional MIFs.
3) Publish all inter-regional interchange fees covered by the commitments in a clearly visible manner on their respective websites.
The commitments, which will apply for five years and six months, cover inter-regional interchange fees applied to payments made with the Mastercard, Maestro, Visa, Visa Electron and V-PAY credit and debit card brands. A trustee will be appointed by the Commission to monitor the implementation of the commitments.