If you accept cards in the European Union, one regulation does more to protect your margin than any contract you will ever sign: the EU Interchange Fee Regulation (IFR). It sets hard caps on what card-issuing banks can charge you via the interchange component of every transaction.
Yet a majority of EU merchants either don’t know the caps exist — or don’t realise their acquirer is quietly marking interchange up above the legal floor. This guide explains what the regulation does, what it doesn’t cover, and how to make sure you are getting the full benefit.
What is interchange, in one paragraph
Every card transaction has three fee layers: interchange (paid to the card-issuing bank), scheme fees (paid to Visa / Mastercard), and acquirer markup (your PSP’s margin). Interchange is typically the largest component, which is why the EU decided to cap it.
The core caps under the IFR (Regulation EU 2015/751)
Consumer debit cards
0.2% per transaction. This applies to EEA-issued consumer debit cards used for EEA transactions.
Consumer credit cards
0.3% per transaction. Same geographic scope.
Commercial cards (business / corporate)
Not capped under the IFR. Interchange on corporate cards can reach 1.5%–2.0% or more. This is why a statement with “high business-card share” often hides meaningful cost.
Non-EEA cards
Not capped. A US or UK consumer card used in your EU checkout can carry 1%+ interchange.
Three-party schemes (Amex, some Diners)
Not capped under the IFR, though they have separate commercial arrangements.
Why the cap matters more than most merchants realise
If 70% of your volume is consumer debit and 20% is consumer credit, almost 90% of your transactions are legally capped. The blended interchange component of your card mix should therefore sit comfortably under 0.30%.
If your statement shows an interchange line materially higher than that, one of three things is happening:
- You have an unusually high share of commercial or non-EEA cards
- Your acquirer is reporting “interchange” that actually includes a hidden uplift
- You are on a blended contract where the acquirer captures the spread when interchange falls
Option 3 is the single most common cause of EU merchants overpaying.
What the IFR also did (quietly)
The regulation didn’t only cap fees. It also introduced rules that are underused by merchants:
- Unbundling — acquirers must provide fees broken out by card category on request
- Honour-all-cards rule changes — you can refuse premium card categories if you choose
- Co-badged card routing — if a card is co-badged (e.g. Visa + domestic scheme), the merchant can influence the routing (and typically pick the cheaper network)
Most merchants never exercise these rights because they don’t know they exist.
How to verify your acquirer is respecting the caps
- Request an interchange-itemised statement for a recent month. Under PSD2 and IFR transparency rules, your acquirer must provide it.
- Filter the data by card type — consumer debit, consumer credit, commercial, non-EEA.
- Compare the consumer debit / credit lines against 0.2% / 0.3%. If they are higher, something is wrong.
- Check whether “interchange” includes any acquirer uplift. A clean IC++ contract separates interchange, scheme fees and markup into three columns. A mixed column is a red flag.
Common ways merchants still overpay — even with capped interchange
- Blended contracts quote a single rate; when interchange falls to 0.2%, the merchant still pays the blended number. The acquirer pockets the difference.
- Scheme fee markup — raw scheme fees are around 0.05%–0.15%, but some acquirers bill pass-through fees 2–3× higher.
- Commercial / non-EEA uplift applied beyond the actual cost — the acquirer adds margin to uncapped interchange knowing the merchant won’t easily benchmark it.
- Authorisation fees, refund fees, chargeback fees — unrelated to interchange but rarely challenged.
Upcoming regulatory shifts to watch
- PSD3 is progressing through EU legislative bodies and will tighten merchant transparency further.
- Digital Euro — if launched, will introduce a new settlement rail that could reshape retail interchange economics.
- EU Instant Payments Regulation — pushes SEPA Instant ubiquity, which opens account-to-account alternatives to card rails entirely.
The practical takeaway
The IFR gave EU merchants the strongest consumer-card interchange protections in the world — but the benefit is only real if you are on a pricing model (typically IC++) that lets the savings flow through to you. On a blended contract, the cap protects the acquirer’s margin, not yours.
If you have never verified your interchange against the regulatory caps, you should. FeeFox audits this for free and shows you exactly where your acquirer is respecting the IFR — and where they are not.