The impact of the interchange fee regulation on merchants: evidence from Italy

Guerino Ardizzi () and Michele Savini Zangrandi ()
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Guerino Ardizzi: Bank of Italy
Michele Savini Zangrandi: Bank of Italy

No 434, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Interchange fees (IF) are fees that a cardholder�s bank (issuer) receives from the merchant�s bank (acquirer) when a card payment is executed. Interchange fees are an important part of the fees charged to merchants by acquirers. Because of their level and fragmentation, interchange fees can restrict competition and have thus been regulated in the EU. The Interchange Fee Regulation (IFR) came into effect for all EU member states in 2015 and sets maximum limits on interchange fees. By using a panel of Italian banks we assess the impact of introducing the IF regulation on the fees that acquiring banks charge to merchants (merchant fees), and on the merchants� acceptance of card-based payments. We find that, in line with the regulatory intent, the ceiling imposed on interchange fees has led to a sizeable drop in merchant fees and to an increase in the acceptance of card payments, measured as transactions per terminal.

Keywords: interchange fee; payment card; acquiring; point of sale; banking panel data (search for similar items in EconPapers)
JEL-codes: E41 G14 G21 G38 L14 L42 L51 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-ban, nep-com, nep-eur, nep-mac, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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