Brussels, 2016-08-10

European consumers and retailers obtain more clarity in card-based payment transactions.

In the past, card payments were often associated with opaque fees calculated by banks and borne by consumers. Now new regulations entered into force providing a limitation of fees and a transparent design of card payments.

EU Financial Commissioner Jonathan Hill said, consumers as well as payment service providers will benefit from the so called Regulation on Interchange Fees: “From now on, consumers can expect far lower costs for card payments and an increase in acceptance of card payments. Based on the regulations, additional fees on payments made by consumers can nearly be ceased. Therefore, this regulation offers immediate benefits for European consumers.”

Every time a consumer uses a credit or debit card to buy something, the retailer’s bank (“acquiring bank”) must pay a fee to the consumer’s bank that issued the card (“issuing bank”). From the final amount the retailer receives from the acquiring bank for the payment transaction the so called interchange fee is then deducted.

With the new regulation, the EU solves the problem of very diverse and excessive interchange fees. With introducing limits for interchange fees on debit and credit cards in December 2015, the first rules of the regulation were already implemented. The further rules now in force include the following most important amendments:

• Free choice of payment type: Since many payment cards provide several acceptance brands (so called co-badging), issuing banks or card payment systems usually used to choose the brand which yielded the highest interchange fee. Now consumers have the opportunity to choose the most cost-effective brand. Due to that, the retailer can also keep the costs for this brand on a low level.

• One-for-All card: In the past, customers often needed several cards for different products of their banks. Now consumers can request one single card at their bank that is valid for all card products. Moreover, the card will be replaced in the future by a mobile phone.

• Clear labelling of accepted cards: Retailers are now obliged to explicitly mark which cards they accept at their shop’s entrance as well as at the cash desk. In case of online transactions, this information must be displayed on the website.

• Transparent fees: Interchange fees are initially paid by the retailers who pass these subsequently to the consumers through higher prices. In the past, the exact fee structure was unclear, because banks charged retailers a total fee for payment transactions including different brands. According to the new rules, banks now have to submit a fee for every payment transaction to the retailer as long as he did not explicitly request a bundling of fees.

Comprehensive information you can find here.