Visa Europe this morning announced a settlement with the European Commission, agreeing to cap its weighted yearly average intraregional multilateral interchange rate for immediate debit transactions at 0.2% of the sale for four years. This represents a reduction of less than 20% for domestic interchange fees covered by the commitments, the card brand noted in a statement.
The commission first announced the proposed agreement in April (
As part of the agreement, the commission will end proceedings investigating the card association’s immediate debit-interchange rates, Visa Europe says.
“The agreed commitments on immediate debit interchange fees and methodology are an important step towards the achievement of the Single Euro Payment Area, meeting the recent call from the European Central Bank for such guidance,” Peter Ayliffe, Visa Europe president and CEO, said in the statement. “It will provide much-needed legal certainty to all stakeholders and provides a mechanism for a revision to the average 0.2% rate if further data becomes available on the costs of different means of payment, including cash.”
The agreement does not affect credit, deferred debit or commercial multilateral interchange rates. The application of the so-called “merchant indifference” test to credit and deferred debit transactions is considerably more complicated in circumstances where cash is not a realistic alternative to credit, Visa Europe said in its statement.
The card association said it will continue its ongoing discussions with the European Commission “on these complex issues in the coming months, with the aim of reaching an agreed outcome.” Pending the outcome of the discussions, Visa Europe’s multilateral interchange rates for intraregional credit and deferred debit transactions will remain unchanged, Visa Europe said.
MasterCard Worldwide similarly has agreed to lower its interchange on cross-border debit transactions to 0.2% of the sale. It also agreed to lower the rate for credit transactions to 0.3%. These rates determine how much merchant acquirers pay card issuers on cross-border transactions. Acquirers pass the fees on to merchants. The rates for debit previously ranged from 0.4% to 0.75% and for credit 0.8% to 1.9%.
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