EC and card schemes are closing in on inter-regional interchange fee agreement. How is that going to impact EU based merchants?
Recently Finextra.com revealed the news that Visa and Mastercard are nearing a deal with the European Commission, under which the interchange fees, EU merchants are paying on transactions, involving cards issued outside of the region, will be reduced by at least 40%. Why this news is important to the merchants in European Union? One of most significant components of card acceptance costs is the interchange fee, which in recent years became regulated in various regions. In this post I’ll be discussing what is the interchange fee, how it varies in different regions, what are the problems associated with it, and what are current initiatives to reduce it. What is the interchange fee? In the payment card industry, interchange fee stands for the money transferred from the acquiring financial institution (acquirer - which accepts a payment with a card) to the issuing financial institution (issuer - which issues the payment card to the cardholder) for each purchase transaction