The Future for Card Payments: Capping the Interchange in 2015

Upon the commencement of an EU Regulation, the interchange fee banks and acquirers are charged on consumer credit cards must be capped at 0.3%. Given that many of the existing credit card company interchange fees are in excess of this, they will be forced to reduce their fees accordingly in order to comply with the new regulations.

Visa and MasterCard are leading the way and have already announced that they will be reducing their interchange fee to 0.3% on the 9th December 2015. For MasterCard this is the final stage of a phased approach that began in mid 2015 and has seen them reduce their rates from 0.8%.

What will the change mean for Business-owners?

According to Card Cutters this may not just be good news for the banks and acquirers; it may also be good news for businesses. This, however, is dependent upon them passing on the savings to the businesses. To do this, as many businesses are currently charged a set % for their consumer’s credit card transactions, they would have to either reduce this fee accordingly or change them to interchange plus pricing.

Although the full reduction would result in substantial savings it is unlikely that the banks and acquirers will pass the full benefit on. The benefit that this regulation actually results in for businesses, if indeed it results in any all, will therefore be at the complete discretion of each individual organisation.

The Last Word

How generous the banks and acquirers are going to be, may take some time to be unveiled. This is because, given that they are under no obligation to pass on the savings at all, they are not under any time constraints to decide that if they are going to, by how much. Further, they may, for instance, wish to put off what is sure to be a huge undertaking. After all, re-pricing all of their customers would be a huge task for even the most moderate of sized banks or acquirers and will therefore not be one that they will be eager to commence.

They may also wish to wait to see how much of a saving they themselves are going to be able to make before accessing how much of this saving they wish to pass on to their customers. Finally, given that they are under no obligation to pass any of the savings on, they may choose not to do so at all and there is no requirement for them to advice their customers of this decision. This is certainly something for business-owners to look out for in the next 12 months and beyond.