Is the market ready for the Card Interchange Fee Regulation?

Is the market ready for the Card Interchange Fee Regulation?

07 June 16

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On 8 June and 9 December 2015, respectively, Regulation from the European Parliament and the Council of 29 April 2015, entitled the Interchange Fee Regulation ( or Regulation ( ) 2015/751), partially came into effect, ensuring a cap on interchange rates for consumer cards across the . On 9 June 2016, the final part of the Regulation enters into force.

As of this date, each newly issued card – whether debit, credit, prepaid or commercial – has to be visibly and electronically identifiable. Existing cards also need to be electronically identifiable. Other provisions include:

  • Permitting multiple brands to be used on the same card.
  • Removing the 'honour all cards' rule.
  • Ensuring the introduction of an ‘interchange plus’ pricing structure rather than a blended pricing structure by acquirers.
  • Clearly separating transaction processing and scheme management activities according to European Banking Authority regulations.
  • Leaving the choice of brand and application used at the point of sale to the interaction between the payer and the payee, when multiple brands and/or applications appear on the same device.

It will take a significant amount of time and investment for providers to get fully compliant ready in such a short time-span as all card schemes will have to modify their product description for each card type, including card profiles, tests and certification specifications. A short term solution based on Issuer (or Bank) Identification Number tables might allow providers to meet the regulatory deadline.

In February, the European Payments Council and Cards Stakeholders Group (CSG) released a Bulletin to the Cards Standardisation Volume v7.1 defining guidelines for using the (CSG requested) EMVCo data element to facilitate compliance with the in a harmonised way. These guidelines are included in the latest Volume version, currently under consultation.

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