Interchange Fee Regulation—essentials
Interchange Fee Regulation—essentials

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Interchange Fee Regulation—essentials
  • Meaning of interchange fees
  • Regulation of Interchange Fees
  • The IFR—caps on interchange fees
  • The rules
  • The exemptions
  • The IFR—business rules
  • Licensing
  • Separation of card scheme and processing
  • Co-badging of cards
  • More...

BREXIT: UK is leaving EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For further guidance on the impact of Brexit on the regulation of interchange fees, see Practice Note: Impact of Brexit: Interchange Fee Regulation—quick guide.

The Interchange Fee Regulation (an EU regulation on interchange fees for card-based payment transactions) (Regulation (EU) 2015/751) (the IFR) was enacted in response to the perceived anti-competitive effect of fees paid by merchants to banks for accepting payments made using credit or debit cards. The IFR imposes a cap on such fees and introduces a set of business rules aimed at prohibiting anti-competitive behaviour. The goal is to increase competition, lower prices for consumers and increase opportunities for new entrants into the payments market. The IFR entered into effect on 8 June 2015. The IFR has applied since 8 June 2015, with the exception of Articles 3, 4, 6 and 12, which became applicable on 9 December 2015, and the exception of Articles 7, 8, 9 and 10, which became applicable on 9 June 2016.

The cap on fees introduced by the IFR should also be considered alongside the second Payment Services Directive (Directive 2015/2366/EU) (PSD2) which was transposed into UK law on 13 January 2018, and which prohibits surcharging for the use of payment instruments which

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