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European Union Agrees on Interchange Fees Cap
Negotiators representing the 28 European Union governments have reached an initial agreement on an interchange fees cap incurred by the use of debit and credit cards. Expected to take effect in mid-2015, Visa and MasterCard can charge up to 0.3 percent per credit card transactions made domestically or cross border within the European Union while debit card transactions are capped at 0.2 percent. The ruling has been met with resistance from Visa and MasterCard, but it levels the playing field for cross border transactions in the EU.
What Are Interchange Fees?The interchange fee in a credit or debit card transaction is the small percentage that the merchant’s bank pays to the bank that issued the consumer credit card in the transaction. The interchange fees in Europe differed from country to country, amounting as high as 1.8 percent per transaction in Germany to 0.5 percent in France.
What Does the Interchange Fee Cap Mean for Merchants?The EU ruling comes as welcome news for European merchants who will undoubtedly profit more and, ideally, pass along the savings to consumers by lowering costs. On the other side, Visa Europe and MasterCard have decried the interchange fees cap. Visa Europe is currently pleading to European Commission members to revisit the reforms (see Pymnts.com story). Said Marc Temmerman, Visa Europe’s Director of European Affairs, to Pymnts.com, “It is unlikely that retailers will pass on all, if any, of the savings that they gain,” and that banks “may have no other option but to restructure their fee models which may result in consumers facing new or increased charges for the privilege of having a debit card or even a current account.”
3 Benefits For Instabill MerchantsThe benefits for Instabill – and its network of merchants incorporated in the European Union – are threefold:
- Firstly, the interchange fees cap enables Instabill to offer extremely competitive fees for European merchant accounts.
- Second, e-commerce and POS businesses who wish to expand into Europe need a company registration. Instabill merchant account managers can take care of that for you.
- Finally, with international, offshore and domestic banking partners, Instabill has high risk merchant account solutions that few others have in industries such as adult, e-cigarettes, penny auctions and financial services.
Ready for a Conversation?The EU interchange fees cap will affect merchants worldwide, particularly those throughout Europe. Let us show you how to navigate them. To find out more, Instabill merchant account managers are available via the live chat option below or by calling 1-800-318-2713.
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