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Interchange fee transparency requirement comes into force

EU regulations on transparency in interchange fees have come into force.14 Jun 2016

Interchange fees, which are applied to account for the cost of processing transactions, are paid by the retailer's bank to the purchaser's bank, and are deducted from the amount the retailer makes on the sale.

Regulations agreed last year cap interchange fees for the most widely used payment cards and bring in disclosure requirements for both banks and retailers.

The cap came into force in December 2015, and the disclosure rules on 9 June this year.

The new rules provide retailers with rights to access information on any charges that are applied to payment card transactions, including a breakdown of interchange fees and 'merchant service charges' that are also paid to banks for processing the transactions. The rules were introduced because interchange fees used to be hidden from retailers and consumers, the European Commission said, potentially leading to higher charges and costs being passed on to consumers.

Competition commissioner Margrethe Vestager said: "Many consumers use payment cards every day when they buy in shops or online. For years, the fees charged by the banks for these card payments were largely kept in the dark even though the costs are ultimately paid by consumers. The interchange fee regulation has capped these fees and made card payments more transparent. This means lower costs to the benefits of millions of European consumers and retailers."