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Published date: 8 June 2017

18 months on - Impact of the Interchange Fee Regulation on the European Union cards market

The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

It is now almost 18 months since the introduction of the Interchange Fee Regulation (IFR). IFR covered a good deal more than the interchange fee caps and included substantial changes to the business rules for cards acceptance and processing frameworks. So, has implementation been effective and more importantly have there been unintended consequences?

Credit interchange caps hurt issuers

Credit card issuers have suffered most from the reduction to 0.3 percent with average European Union (EU) interchange falling by over 50 percent and potentially €2bn annually sucked out of their revenues. This has forced issuers to cut back on consumer loyalty programs and cash back offers. Several have introduced card fees. The UK, the largest EU credit card market, has been most impacted. Conversely, large merchants have received a very significant revenue transfer, addin