At the Estonian Payment Environment Forum yesterday Eesti Pank presented the results of a survey of the impact of the regulation on interchange fees for card payments. The survey clearly showed that the costs of card payments have fallen primarily for larger businesses.

Eesti Pank surveyed members of the Estonian Traders Association and the Estonian Association of Small and Medium Enterprises in April and May this year to find out whether the Europe-wide Regulation on Interchange Fees had led to any changes for Estonian businesses. It was apparent from the results that the costs of card payments have fallen for large businesses, but the changes have not trickled down to all small businesses.

The banks that responded to the survey had not managed to inform all the businesses among their clients about the regulation on interchange fees or explain the principles behind the changes in the fees for card payments. Several large companies also confirmed that they had only received the information in part, but they still found that the costs of card payments had become more transparent. At present it is principally smaller companies that are in the dark, and that have not felt the impact of the regulation yet.

“For companies that have not contacted their bank about changing their contract conditions in the past two years, now is the time to look into what the fees for card payments are made up of”, advised Madis Müller, Deputy Governor of Eesti Pank.

One of the biggest changes in the Regulation on Interchange Fees was the introduction of a cap on interbank interchange fees, which the banks later reclaim from the card transactions of merchants, of a maximum of 0.2% of the value of transactions with debit cards, and 0.3% of the value of transactions with credit cards. Although the interbank interchange fees are only one part of the fees for card payments, the change should still lower the costs of card payments for merchants. The introduction of the cap was intended to ensure that it makes no difference to the costs to merchants whether their client pays for goods and services by card or in cash.

Background
The Regulation on Interchange Fees for card payments was designed to help create a payments market for the whole of the European Union, allowing consumers, retailers and other companies to benefit fully from the internal market of the European Union by capping interchange fees for card payments.

The regulation came into force on 8 June 2015 and was implemented in three stages. The cap on interchange fees of 0.2% for transactions with debit cards and 0.3% for transactions with credit cards was introduced on 9 December 2015, while the business rules distinguishing card schemes and processors and covering the transparency of fees came in from 9 June 2016. The regulation allowed for a five-year transition period for domestic debit card transactions, but Estonia did not apply this.

The Estonian Payment Environment Forum was founded jointly in April 2012 by Eesti Pank, the Estonian Banking Association and the Ministry of Finance. It is attended by the banks and other market participants. The forum is chaired by Eesti Pank. More detailed information about the Forum, including the topics discussed there and the participants, can be found in Estonian at www.pangaliit.ee/maksefoorum.

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Leanyka Libeon
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