The draft Law on Interchange Fees and Special Rules of Business for Payment Transactions on the Basis of the Payment Cards (“Draft IF Law”) is based on Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions (“EU Regulation on IF”). As announced earlier, the purpose of this Draft IF Law is to facilitate cashless payments and to encourage greater acceptance at merchants by, inter alia, regulating levels of interchange fees. According to the NBS website, the deadline for submitting suggestions and amendments to the current draft is 20 September 2017. Below is a brief overview of the Draft IF Law’s main provisions.
Regulation of Interchange Fees
The Draft IF Law introduces a gradual regulation of interchange fees. Article 12 of the Draft IF Law provides that, within a transitory period of nine (9) months as of the date of its entry into force, the payment service provider can charge interchange fees for debit card (including prepaid) transactions in the amount of up to 0.5% of the amount of each transaction, and for credit card transactions in the amount of up to 0.6% of the amount of each transaction. Following the transitory period, the amount of interchange fee for debit card (including prepaid) transactions would be capped at 0.2% of the amount of each transaction, while the amount of interchange fee for credit card transactions would be capped at 0.3% of the transaction amount.
Irrespective of the above caps, the NBS may also prescribe the highest fixed amount of interchange fee that can be charged for payment card transactions. According to the Draft IF Law, such a cap on interchange fees shall apply to transactions of any agreed amount, including the net fee, which has the same or similar effect as an interchange fee and which is received by the issuer from the payment card scheme, its acquirer, or any other intermediary involved in the payment transaction. However, this restriction shall not apply to: (i) payment transactions based on payment cards related to the withdrawal of cash at a bank teller or at an ATM; (ii) payment transactions based on “business cards”; and (iii) payment transactions based on payment cards issued by a third-party scheme.
The Draft IF Law introduces additional provisions regarding interchange fees, which resemble those contained in the EU Regulation on IF:
i. Co-badging (Article 4 of the Draft IF Law) – An issuer may introduce two or more payment brands or payment applications on card based payment instrument. In doing so, the issuer may not be restricted by the rules of card schemes or similar measure
ii. Unblending (Article 5 of the Draft IF Law) – The acquirer is obliged to offer and charge a merchant service charge to each merchant separately for different categories and different brands of payment cards with different interchange fee levels, unless the merchant requests from the acquirer, in writing, to charge blended service charges. Acquirers are obliged to include in their agreements with merchants individually specified information on the amount of all service charges (interchange fees, merchant service charges and card scheme fees) applicable with respect to each category and brand of payment cards.
iii. “Honour All Cards Rule” (Article 6 of the Draft IF Law) – Payment service providers may oblige merchants that accept payment instruments based on a payment card of one issuer to accept other payment instruments based on payment cards that are issued within the framework of the same payment card scheme, only if the following conditions are met: (i) payment instruments are based on the same brand and are of the same category of debit or credit card; (ii) such payment instruments are issued to consumers; and (iii) the interchange fee applicable for payment transactions performed on the basis of these payment instruments is calculated in accordance with the prescribed caps (as stated above)
iv. Prohibition of undue influence on merchants when accepting payment cards (Article 7 of the Draft IF Law) – Card scheme rules and agreements between the acquirer and the merchant may not prohibit the merchant to: (i) instruct the consumer to use any payment instrument; (ii) give advantage to payment instruments of a certain card scheme; and (iii) inform the payer of the interchange fees and merchant service charge payable by the merchant.
v. Information provided to the merchant on individual payment transactions based on payment cards (Article 8 of the Draft IF Law) – After the execution of an individual card-based payment transaction, the merchant’s payment services provider is obliged to provide the merchant with the following information: (i) the reference enabling the merchant to identify the card-based payment transaction; (ii) the amount of the payment transaction in the currency in which the merchant’s payment account is credited; (iii) the amount of any charges for the card-based payment transaction, indicating separately the merchant service charge and the amount of the interchange fee. However, with the merchant’s prior and explicit consent, the information referred to above may be aggregated by brand, application, payment instrument categories and rates of interchange fees applicable to the transaction.
vi. Protection of the rights and interests of consumers (Article 9 of the Draft IF Law) – Payment service users, and merchants and payers in particular, have the right to protect their rights in accordance with the relevant rules regulating payment services or the protection of users of financial services in cases where the issuer or the acquirer does not comply with the provisions of the Draft IF Law.
The NBS supervises application of the Draft IF Law by issuers, acquirers, card schemes, processors and other technical service providers. Entities that do not have their registered seat or branch in Serbia are obliged to inform the NBS on the manner in which the NBS could communicate with such an entity and to provide to the NBS, upon the latter’s request, data relevant for the application of Draft IF Law.