4 ms·

Merchant fees for both debit and credit cards are significantly lower in all EU countries (and UK), compared to the US, thanks to the interchange fee regulation

Merchant fees for both debit and credit cards are significantly lower in all EU countries (and UK), compared to the US, thanks to the interchange fee regulation (IFR) that caps interchange fees at 0.2% for debit card and 0.3% for credit cards. This translates into much lower merchant fees. Even a tiny startup with zero transaction volume can easily get less than 2% on their physical card transactions (using something like iZettle or SumUp). Big retailers will be paying well under 1%. Also, merchants are banned from adding surcharges for debit and credit card transactions in the EU & UK.

c12 5y ago
Due to Brexit merchant fees in the UK are no longer capped. Visa for example, plan to increase the interchange fee on digital payments made between European customers and British businesses from 0.3% to 1.5%. Other providers will surely follow. Still lower fees than in the states but probably not for long.
- Reason077 5y ago
  > "Due to Brexit merchant fees in the UK are no longer capped." No, they are absolutely still capped in the UK. The IFR regulation has been mirrored in the UK so the same caps still apply to UK cards and UK banks. The exception you are referring to is when a UK card is used for an online ("card not present") transaction at an EU merchant. In this case it is now considered an inter-regional transaction and a higher cap applies: 1.15% for debit and 1.5% for credit cards. (but note, even here there is still a cap!)
stephen_g 5y ago
Interesting. In Australia you can charge a surcharge, but only what the interchange fee cost you. So airlines especially used to charge large fees, like $12 or something, and now can only charge a few dollars.
- nicoburns 5y ago
  Before this law in the UK it was mostly small businesses (e.g. local independent grocery stores) charging 50p per transaction. I think the law was probably to encourage uptake of contactless payments which are targeted at these small transactions. It's still legal here to have a minimum transaction value for paying with card, which some businesses use. But since the pandemic it's become more common to find businesses that don't accept cash than the other way around.
  - TheOtherHobbes 5y ago
    I occasionally had disagreements with shop owners because I didn't have cash and I wanted them to add the payment fee manually so I could pay by card and actually - you know - buy stuff. A lot simply wouldn't - like I was attempting fraud or something.
    - oarsinsync 5y ago
      I once tried to buy a beer in a small corner shop. The beer was 2€. The minimum charge for card payments was 5€. I agreed to pay 5€. The shopkeeper refused to charge me 5€. I walked out without my beer, sad, and wishing I'd remembered to carry some cash that day.
      - KptMarchewa 5y ago
        Couldn't you buy three? I mean, if you're already price insensitive to pay 5 euro for one...
        oarsinsync 5y ago
        I wish I'd thought of that at the time. I will remember that for future. Thanks!
    - NullPrefix 5y ago
      You're trying to use the workflow outside of the happy path.
rendaw 5y ago
How do the IFR caps work with small transactions? Like < 1 EUR? Maybe I should move to Europe.
HappySweeney 5y ago
Canada also banned said fees, and retailers with high-priced/low-margin goods (ie: computers) simply gave cash discounts to compensate. nb my info is at least 20 years out-of-date, though.
jsilence 5y ago
"Also, merchants are banned from adding surcharges for debit and credit card transactions in the EU & UK." Any pointer to this legislation would be appreciated. The local swimming pool lately started adding the transaction fees to the ticket after the sale.
- Reason077 5y ago
  In the UK, the relavent legislation is the Consumer Rights (Payment Surcharges) Regulations 2012 (amended by the Payment Services Regulations 2017). The ban on surcharges for credit & debit cards has been in force since January 13th, 2018. Further details here: https://www.businesscompanion.info/en/quick-guides/pricing-and-payment/payment-surcharges https://www.businesscompanion.info/en/quick-guides/pricing-a... https://www.gov.uk/government/publications/payment-surcharges https://www.gov.uk/government/publications/payment-surcharge...
gfxgirl 5y ago
Sure, but then add in 21% VAT tax. Not defending the US but a 3% fee + (0%-11%) added sales tax doesn't seem like it would be a bigger "weight on the system" than a 21% VAT tax
- bakuninsbart 5y ago
  VAT pays for our free schools and healthcare, transaction fees go into banks coffers. For you as an individual, some things are more expensive to purchase in Europe, sure, but I think equivocating the two is false. E: I didn't read the guy you were answering closely enough. In the context of his comment, yours of course makes perfect sense.
- unglaublich 5y ago
  The 21% is used to evolve and invest in a country which ultimately will lead to further economic growth whereas the 3% is used to enrich CC companies.

c12 5y ago

Due to Brexit merchant fees in the UK are no longer capped. Visa for example, plan to increase the interchange fee on digital payments made between European customers and British businesses from 0.3% to 1.5%. Other providers will surely follow. Still lower fees than in the states but probably not for long.

Reason077 5y ago
> "Due to Brexit merchant fees in the UK are no longer capped." No, they are absolutely still capped in the UK. The IFR regulation has been mirrored in the UK so the same caps still apply to UK cards and UK banks. The exception you are referring to is when a UK card is used for an online ("card not present") transaction at an EU merchant. In this case it is now considered an inter-regional transaction and a higher cap applies: 1.15% for debit and 1.5% for credit cards. (but note, even here there is still a cap!)

stephen_g 5y ago

Interesting. In Australia you can charge a surcharge, but only what the interchange fee cost you. So airlines especially used to charge large fees, like $12 or something, and now can only charge a few dollars.

nicoburns 5y ago
Before this law in the UK it was mostly small businesses (e.g. local independent grocery stores) charging 50p per transaction. I think the law was probably to encourage uptake of contactless payments which are targeted at these small transactions. It's still legal here to have a minimum transaction value for paying with card, which some businesses use. But since the pandemic it's become more common to find businesses that don't accept cash than the other way around.
- TheOtherHobbes 5y ago
  I occasionally had disagreements with shop owners because I didn't have cash and I wanted them to add the payment fee manually so I could pay by card and actually - you know - buy stuff. A lot simply wouldn't - like I was attempting fraud or something.
  - oarsinsync 5y ago
    I once tried to buy a beer in a small corner shop. The beer was 2€. The minimum charge for card payments was 5€. I agreed to pay 5€. The shopkeeper refused to charge me 5€. I walked out without my beer, sad, and wishing I'd remembered to carry some cash that day.
    - KptMarchewa 5y ago
      Couldn't you buy three? I mean, if you're already price insensitive to pay 5 euro for one...
      - oarsinsync 5y ago
        I wish I'd thought of that at the time. I will remember that for future. Thanks!
  - NullPrefix 5y ago
    You're trying to use the workflow outside of the happy path.

rendaw 5y ago

How do the IFR caps work with small transactions? Like < 1 EUR? Maybe I should move to Europe.

HappySweeney 5y ago

Canada also banned said fees, and retailers with high-priced/low-margin goods (ie: computers) simply gave cash discounts to compensate. nb my info is at least 20 years out-of-date, though.

jsilence 5y ago

"Also, merchants are banned from adding surcharges for debit and credit card transactions in the EU & UK." Any pointer to this legislation would be appreciated. The local swimming pool lately started adding the transaction fees to the ticket after the sale.

Reason077 5y ago
In the UK, the relavent legislation is the Consumer Rights (Payment Surcharges) Regulations 2012 (amended by the Payment Services Regulations 2017). The ban on surcharges for credit & debit cards has been in force since January 13th, 2018. Further details here: https://www.businesscompanion.info/en/quick-guides/pricing-and-payment/payment-surcharges https://www.businesscompanion.info/en/quick-guides/pricing-a... https://www.gov.uk/government/publications/payment-surcharges https://www.gov.uk/government/publications/payment-surcharge...

gfxgirl 5y ago

Sure, but then add in 21% VAT tax. Not defending the US but a 3% fee + (0%-11%) added sales tax doesn't seem like it would be a bigger "weight on the system" than a 21% VAT tax

bakuninsbart 5y ago
VAT pays for our free schools and healthcare, transaction fees go into banks coffers. For you as an individual, some things are more expensive to purchase in Europe, sure, but I think equivocating the two is false. E: I didn't read the guy you were answering closely enough. In the context of his comment, yours of course makes perfect sense.
unglaublich 5y ago
The 21% is used to evolve and invest in a country which ultimately will lead to further economic growth whereas the 3% is used to enrich CC companies.