HM Treasury has published a document that sets out its final approach to implementing the Regulation on interchange fees for card based payment transactions, following its earlier consultation on 27 July 2015.
In the document HM Treasury notes that whilst the Regulation is directly applicable it offers national discretions in three key areas:
- Member States can decide to implement lower interchange fee caps for domestic credit card transactions than the caps set out in the Regulation. HM Treasury confirms that the UK Government’s position remains the same since its consultation – that interchange fees for domestic credit card transactions should be capped at 0.3% per transaction;
- Member States can decide to implement lower caps on interchange fees for domestic debit card transactions than the caps set out in the Regulation. There are also other flexibilities in the way Member States can apply interchange fee caps for domestic debit card transactions, such as applying a weighted average for a period of up to 5 years. In its earlier consultation HM Treasury proposed to exercise the national discretion so that interchange fees could not exceed more than the equivalent of 0.2% of the annual overall transaction value of all domestic debit card transactions within each payment card scheme. HM Treasury now confirms that it will allow card schemes the flexibility to implement a weighted average approach for domestic debit card schemes; and
- Member States can exempt three party card schemes that use issuers or acquirers from caps to interchange fees for a period of up to three years, provided that the scheme’s market share remains below 3% in that Member State. HM Treasury confirms that the UK Government will exercise the exemption. However, the UK Government will be able to revisit the decision within the maximum three year period should it deem it appropriate to do so.
View Rules to cap credit and debit card fees set out by government, 8 October 2015