Regulating Interchange Fees for Card Payments

The European retail payments market is fragmented. It used to consist of twenty-eight nationally operating payment markets served by national schemes, which were separated from each other by legal and technical barriers. With the unification of the European retail payments market, most of the legal and technical barriers between countries have been removed. National payment instruments for credit transfers and direct debit payments have gradually been replaced by European payment instruments, and since 1 August 2014 there are, in theory, no differences between making payments with these payment instruments within one’s own country or to another European country. However, this does not hold yet for card payments, which ‘have not reached the same level of harmonisation and integration as credit transfers and direct debits’ (European Central Bank (ECB), 2014).1 According to the ECB, ‘substantial efforts are still required in order to achieve a single card payment area’, as the card payment market is very complex.