Debit card interchange regulation is reshaping the economics of card payments as governments around the world take a more active role in determining interchange rates. As those rates move lower, financial institutions, merchants, and payment networks must consider how regulatory changes could affect debit card programs and the broader payments ecosystem.
Mercator Advisory Group’s report, Global Interchange Regulation: Impact on Debit Cards, examines the consequences of declining interchange rates and changing transaction liability. The research explores what increased regulation could mean for debit card activity as payment networks increasingly operate within a highly regulated global environment.
Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Global Interchange Regulation: Impact on Debit Cards
What Average Customers Don’t Understand About Merchant Interchange Fees
- The merchant pays BOTH the card network & the card issuer.
- The “interchange” fee is paid to card issuers and funds card rewards programs.
- But there’s also a “discount fee” paid to the card network and processor.
- Fees are deducted from the transaction before they post to the merchant account.
- Merchants also cover the cost of upgrading POS terminals with new tech.
- And merchants are liable for fraud if they’re out of compliance with 3DSv2.
About the report
The card payment network infrastructure is so vital to how commerce is conducted that it is considered a utility and as a utility, has become highly regulated in many countries. As government regulators take on the job of setting interchange, rates are moving closer to zero and transaction liability is being more equally shared between merchants and issuers. A new research report from Mercator Advisory Group titled Global Interchange Regulation: Impact on Debit Cards explores the ramifications of lower interchange on debit card activity.