Regional considerations for Interchange ++
As you choose to expand your platform business into new regions like the US & Europe, it’s helpful to know that the interchange fees are capped under the following regulations. This could reduce barriers to enter these markets with competitive payments pricing.
European Interchange Fee Regulation (IRF)
The European Economic Area (EEA) introduced interchange fee regulations in 2015 where interchange fees are capped for consumer cards in all countries within the EEA region. As a result, the EEA is now one of the cheapest options worldwide and is considered an excellent place to set up entities for cross-border transactions.
The EEA and UK interregional fee caps for card-present transactions are:
0.20% for debit transactionsÂ
0.30% for credit transactions.Â
1.15% for card-not-present debit transactions
1.50% for card-not-present credit transactions
The Durbin Amendment (US only)
This amendment was enacted in 2010. If the issuing bank has assets of $10bn or more, its debit and prepaid cards will be charged regulated rates, i.e. an interchange rate of 0.05% + $0.21 or 0.05% + $0.22, depending on fraud prevention policies.
Depending on your business case to expand to these regions, you could find this favorable when determining your pricing. Find more details here.