Understanding the Prohibition of Circumvention Under the EU Regulation on Interchange Fees for Credit and Debit Card Payment Transactions

Sancho Guibert, Assistant General Counsel, Citibank

1. The European Regulation on interchange fees’ cap to card based transactions, and its entry into force on 9 December 2015 2. Understanding the prohibition of circumventing the interchange fees’ cap 3. The Durbin amendment and the US experience 4. What type of agreed remuneration for card issuers is under IFR prohibition rule? 5. Compliance challenges and the need of an official interpretation rule This is a follow-up paper to other published in Vol. 7 No. 28, Summer 2014, 2885, titled “Multilateral interchange fee capping a good idea?”, which includes an analysis on the proposal for a regulation on interchange fees, finally approved as Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions (IFR). As noted in said paper, interchange fees received by credit and debit card issuers have been at the heart of a long standing battle involving retailers and payment networks, as these fees are ultimately charged to retailers as a percentage of the price of the goods and services purchased at their point of sales.