Antitrust: Commission market tests Visa Europe's commitments to cut Multilateral Interchange Fees (MIFs) for debit cards transactions - frequently asked questions.
Interchange fees are charged by a cardholder's bank (the 'issuing bank') to a merchant's bank (the 'acquiring bank') for each sales transaction made at a merchant outlet with a payment card.
Interchange fees are either agreed bilaterally, between one issuing and one acquiring bank, or multilaterally, by a number of issuing/acquiring banks or by means of a decision binding all banks participating in a payment card scheme. The industry refers to these multilateral interchange fees as "MIFs". A MIF can be a percentage, a flat fee or a combined fee (percentage and flat fee).
When a customer uses a payment card to buy from a merchant, the merchant receives from his bank (the acquiring bank) the sales price less a 'merchant service charge', the fee a merchant must pay to his bank for accepting the card as means of payment for that transaction. A large part of the merchant service charge is determined by the interchange fee. The customer's bank (the issuing bank), in turn, pays the acquiring bank the sales price minus the MIF and the sales price is deducted from the customer's bank account. The MIF is therefore a cost that is finally charged to the merchant (through the reduction of the purchase price) who passes the costs on to consumers in the price level of the good or service.
What are the Commission's competition concerns as regards interchange fees?
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