Visa and Mastercard Lower Multilateral Interchange Fees in European Economic Union

Paying for things with Visa and Mastercard in Europe is getting a little cheaper. This past April, the European Union accepted offers made by Mastercard and Visa to reduce their multilateral interchange fees (MIF) for payments within the European Economic Area (EEA) where the customer’s card was issued elsewhere.

In other words, if you live outside of the European Economic Area, and you travel to the EEA, you would have to pay interchange fees on all your purchases.

For example, a Chinese tourist who pays for dinner in a restaurant in France.

A bunch of blue balloons from the European Union. Visa and Mastercard have lowered their interchange fees in the EU
The European Union’s flag (12 stars in a circle) on blue balloons.

But Mastercard and Visa lowered their fees by roughly 40% on average, which will reduce the charges retailers pass on to their outside-the-EEA customers. Consumers who already live inside the EEA are not subject to these fees.

As Commissioner Margrethe Vestager, European Commissioner for Competition said in an EU press release:

The commitments. . .will reduce the costs borne by retailers for accepting payments with cards issued outside the EEA. This, together with our January 2019 decision on Mastercard’s cross-border card payment services, will lead to lower prices for European retailers to do business, ultimately to the benefit of all consumers.

Before the change, whenever someone made an EEA-based purchase, the retailer’s bank (the acquiring bank would pay a fee to the customer’s bank (the receiving bank). The acquiring bank would then pass the fee to the retailer, who would then include it in the final price to the customers. However, this was often passed on to people who did not use a credit card.

The change came about because both Mastercard and Visa committed to the EU to reduce their MIFS, which the EU accepted. Their acceptance made the commitments legally binding under the EU’s antitrust rules.

According to the EU’s press release, Mastercard and Visa will cap interchange fees at the following:

1. Reduce the current level of inter-regional interchange fees to or below the following binding caps, within six months:
For card payments carried out by the cardholder in a shop (“Card Present Transactions”):

  • 0.2% of the value of the transaction for debit cards;
  • 0.3% of the value of the transaction for credit cards.

For online payments (“Card Not Present Transactions”):

  • 1.15% of the value of the transaction for debit cards;
  • 1.50% of the value of the transaction for credit cards.

The new lower MIF rates will be in place for a period of at least five years, potentially expiring on November 2, 2024.

While these changes won’t affect North American retail merchants, or non-EEA online merchants who accept credit cards from the EU, this will affect anyone whose business and/or acquiring bank is based in the European Economic Area. If you’re a merchant within the EEA, and you want to learn more about how these changes will affect you,, just visit our website or call us at (800) 408-0095.

Photo credit: Jonatan Svensson Glad (Flickr, Creative Commons 2.0)