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Interchange cap for non-EEA cards

14 MAY, 2019

Visa and Mastercard will reduce their inter-regional interchange fees by an average of about 40 percent, leading to lower costs when European merchants accept cards issued outside of Europe. Since this cap will not affect commercial cards or any cards issued inside the EEA, the impact for most European merchants will be small.

At the end of April, the European Commission announced that Visa’s and Mastercard’s commitment to reduce inter-regional interchange fees had been made legally binding. This cap will significantly reduce the costs when European merchants accept consumer cards issued outside of the European Economic Area (EEA). On average, the inter-regional interchange fees will be lowered by about 40 percent and the reduction will be put in place from 19 October 2019. This cap will not affect corporate cards or cards issued inside the EEA and will mostly affect merchants with large volumes of transactions from international cards.

Inter-regional interchange fees are what European acquirers have to pay card issuing banks outside the EEA when processing payments with their cards. These fees are set by the card networks and for merchants with an Interchange++ price model, they are then included in the transaction price charged by their acquirer. These merchants will benefit directly from the lower costs on this type of transaction.

Read more about the different types of fees and price models here.

In their statement, the European Commission cited concerns that these fees had led to higher prices for European retailers who accepted non-EEA cards and had put them at a competitive disadvantage. By extension, the European Commission also hopes that reducing these fees will lead to cheaper prices for European consumers.

The new fees:

For card payments carried out by the cardholder in a shop ("Card Present Transactions"):

  • 0.2% of the value of the transaction for debit cards;
  • 0.3% of the value of the transaction for credit cards.

For online payments ("Card Not Present Transactions"):

  • 1.15% of the value of the transaction for debit cards;
  • 1.50% of the value of the transaction for credit cards.