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Mastercard removes ICF cap on refunds

Mastercard has announced they are removing their fixed cap on interchange fees for refund transactions with European commercial cards. From 12 July, the cap will be replaced by a variable amount.

On 12 July 2019, Mastercard will remove its current cap on interchange fees (also known as service fees) for commercial European refund transactions. The fixed cap was previously set to a maximum of 0.05€ per transaction but will now be replaced by a variable amount that, for most European countries, is calculated as 75% of the interchange fee of the purchase.

For merchants with an Interchange++ price model, the new fee means they will receive more Interchange back on commercial card refunds within EEA. For customers with blended pricing the new fee will not have any effect as we already refund the merchant service charge.

Example calculations:

Average transaction value 200€

Currently:

Current fee 0.05€ on an ATV of 200€ would mean a refund of 0.025% in ICF

From July onwards:

Purchase rate 1.1% * 0.75 = 0.825% on an ATV of 200€

Average transaction value 20€

Currently:

Current fee 0.05€ on an ATV of 20€ would mean a refund of 0.25% in ICF

From July onwards:

Purchase rate 1.1% * 0.75 = 0.825% on an ATV of 20€