UK payments regulator consults further on interchange fees and rules (IFR)

UK PSR pushes ahead consultation on interchange fees and rules (IFR’s)


The UK Payment Systems Regulator (PSR) gave firms until early July to feedback on the latest guidance proposals forming part of the latest roll-out (Phase 2) of the European regulations concerning interchange fees and associated business rules (known as the IFR’s). The PSR has now sought to further enhance the effective transparency of card payment related fees, issuing additional draft guidance in May 2016 in advance of new elements of the IFR coming into force in June 2016


The related IFR EU legislation was initially implemented in mid- 2015 with initial guidance introduced in December 2015 (Phase 1), which included a cap on the level of fees and costs that could be passed (by card scheme operators) onto merchants processing card payments. Such fees are typically paid by the bank of a servicing or supplying ‘merchant’ to the bank of a ‘card-user’ who makes a card transaction payment, and forms only part of the overall merchant service charge (MSC). The latest draft guidance looks at how the regulator (PSR) can monitor and enforce the updated IFR arrangements. For example, companies that process card-payment transactions for merchants (known as acquirers) will have to clarify and disclose each and all of the component elements making up the actual merchant service charge (MSC). In regard to further card-related business rules, the guidance also covers expectations concerning the proper identification around newer market developments such as the use of ‘co-badged’ or ‘multi-option’ debit and credit cards, as well as explaining the expectations on commercial retailers to give clarity cards being acceptable within their premises and at point-of-sale.


It is expected that reductions and efficiencies in card-payment related costs and fees should be clearly identified and understood by the principal participants, in order that informed choices and decisions can be made whilst potentially enabling savings to be ultimately passed onto card-users and customers. With consultation feedback from affected firms on this latest EU payment-card legislation needing to be with the PSR by early July (see PSR CP16/3), firms could reasonably expect the final provisions to now follow though shortly.