It seems that 0.3% is the magic number for setting caps on interchange fees, since it appears not only in current and closed competition proceedings at the EU and national level, but also in the upcoming Interchange Fees Regulation. MasterCard has promised the Authority for Consumers and Markets (ACM) that it will reduce its domestic interchange fees from 0.9% to 0.3% in the next two years. Reduced caps means good news for retailers, as interchange fees represent 60% of their costs for card-based payment transactions. Retail customers are likely to benefit too, since lower costs normally result in lower prices.
Interchange fees are the tariffs charged by a cardholder's bank to a retailer's bank for processing credit card payments. These fees are set by banks without competitive pressure from retailers and consumers influencing the fee level. This was why the European Commission prohibited MasterCard's cross-border European Economic Area (EEA) interchange fees in 2007. MasterCard subsequently offered to reduce its cross-border fees for credit transactions to 0.3% for undertakings until the European Court of Justice issues a judgment on its appeal.
At the national level, the ACM has accepted MasterCard's commitment to lower its domestic interchange fees to 0.3% over the next two years. In exchange, the ACM has discontinued its investigation into MasterCard. Similarly, the French Competition Authority has accepted Visa's and MasterCard's commitments to reduce their domestic interchange fees in France to 0.28%.
However, is the situation is not resolved yet. Only last year, the European Commission opened an in-depth investigation into MasterCard's inter-regional interchange fees and cross-border acquiring. In addition, earlier in 2014 Visa offered commitments to the commission to cut its cross-border EEA interchange fees to 0.3% and to amend its rules on cross-border acquiring. The commission is also proposing a regulation on interchange fees for card-based payment transactions, which will introduce caps on domestic and cross-border interchange fees. These caps are to be set at 0.3% for credit cards.
Overall, this is good news for retailers and consumers. Capping interchange fees will reduce retailers' costs and should ultimately benefit consumers through lower prices for goods and services.
For further information on this topic please contact Jolling De Pree, Erik H Pijnacker Hordijk or Jaap de Keijzer at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The De Brauw Blackstone Westbroek website can be accessed atwww.debrauw.com.