Visa and Mastercard extend European Union interchange fee cap beyond 2024

PSR calls out Mastercard and Visa UK card scheme dominance
Credit: Bykfa / Shutterstock

The European Commission (EC) has revealed that a voluntary cap on interchange fees adopted by Mastercard and Visa will continue beyond an initially agreed cut-off point.

Visa and Mastercard, the two largest card issuers in the world, made initial commitments to reduce multilateral interchange fees for payments in the European Economic Area (EEA) back in 2019.

The firms reduced the fees by around 40% on average, as the EC made commitments legally binding under European Union (EU) antitrust rules on 29 April 2019. 

Maintaining continued compliance with these antitrust requirements, Visa and Mastercard will retain the cap until November 2029.

Fees for offline transactions using a consumer card will stay at 0.2% for debit cards and 0.3% for credit cards, whilst fees for online transactions will stick at 1.15% for debit cards and 1.5% for credit cards.

“Mastercard and Visa debit and credit cards are still “must-take” for EEA merchants,” the EC explained in a statement.

“In the absence of caps, merchants would face the risk of excessive interchange fees passed on to them through their Merchant Service Charges.”

Antitrust and competitiveness have fallen under the EC”s spotlight on business regulation and business policies as of late. 

The EU’s executive body is particularly keen to address potential issues around large financial institutions and tech companies having a significant advantage over smaller competitors.

Back in March, the EC opened its first investigation into potential breaches of the Digital Markets Act, specifically looking at the impact Big Tech and their roles in possibly dominating their respective markets stunting smaller businesses’ growth.

Similar developments have been observed on non-European EU markets, like the UK, where the Financial Conduct Authority (FCA) has conducted similar antitrust probes.

In the case of Visa and Mastercard, the EC stated that it believes the 2019 fee caps are still appropriate due to a lack of significant market changes during this time. 

However, it added that it is still open to conducting investigations or opening proceedings in the event it finds ‘concrete evidence’ that the current gaps are no longer appropriate.