What is Regulated interchange?

Also: IFR, regulated rates

Capped rates set by the EU Interchange Fee Regulation (0.2% consumer debit, 0.3% consumer credit) and UK equivalents; commercial cards and inter-regional traffic are exempt.

Regulated interchange refers to the maximum interchange fees permitted for certain card transactions within the European Economic Area (EEA) and the UK, as mandated by the Interchange Fee Regulation (IFR).

For consumer debit card transactions, the interchange fee is capped at 0.2% of the transaction value, while for consumer credit card transactions, it is capped at 0.3%.

These caps are applied by the card issuer to the acquirer during the clearing and settlement process, and the specific interchange rate is communicated in the authorisation and clearing messages exchanged between the parties,

typically within data elements such as DE 121 (Interchange Fee Data) or equivalent scheme-specific fields.

For a merchant, regulated interchange translates directly into a component of their overall transaction cost, typically visible on their acquiring statements as a distinct line item or as part of a blended rate.

Merchants benefit from these caps as they reduce the cost of accepting eligible consumer card payments, making these transactions more affordable to process.

A common mistake is assuming that all card transactions are subject to these caps; commercial cards, including business and corporate cards, along with transactions where either the issuer or the acquirer is located outside the EEA or UK (inter-regional transactions),

are exempt from the IFR and can incur significantly higher, unregulated interchange fees.