Cross-border interchange

Why Visa is more cost effective for retailers and how the cross-border domestic interchange programme (CBDIP) will contribute to transforming Visa into the most preferred form of payment and card acceptance across Europe

The payments sector is going through significant and profound change, and at a rate that’s growing faster than ever before.

At Visa Europe, we are seeing the emergence of new payment methods, from both existing players and new players alike and we have tracked a new need from today´s consumers to engage with their providers in a different way, in part because technological advances allow them to and in part because they do not accept that the status quo remains constant.

Hence, in recent years the European payments industry has seen unprecedented levels of investment, to improve the retailers’ and consumers’ customer journey in the areas of security and a better check-out experience (think about contactless & mobile payments and digital wallets like by Visa).

We are seeing a revolution in the retail digital space and at Visa Europe we need to adapt and respond to the needs of those more sophisticated and tech savvy customers. Today retailers demand flexible and scalable solutions, capable of allowing payment transactions to occur in a secure environment everywhere, anytime, on any device and in the most seamless and frictionless way. At Visa we have engaged with a number of European retailers, listened to their needs, and worked with them to bring to life solutions which allow them to put in practice their omni-channel strategy and to enable global commerce.

Add to this some key talking points for retailers, such as SEPA, regulation, fraud, data security, omni channel, millennial shoppers, digital natives to name but a few. All of which increase the complexity of the payments landscape and the requirement for retailers and payments service providers to invest even more on innovation. This sounds like the perfect storm.

As we move into a much more regulated environment, Visa is calling on the European Commission to ensure that while reforming the payment sector, the ability to innovate will not be affected, in order to ensure that retailers and consumers can use and accept cards and card-based form factors in new and more ubiquitous payment scenarios and subsequently increase sales and revenue.

At the same time, based upon the decision taken by the European Commission, to accept Visa Europe’s Commitments on 26 February 2014 (to reduce Interchange) the payment card landscape has become much more attractive and competitive for European retailers, who – from 1 January 2015 – by working with an acquiring bank holding a cross-border license under the cross-border domestic interchange programme (CBDIP) can reduce costs for many transactions. At Visa Europe we are conscious about how these new regulations will be implemented and how they will impact the business case for some of some of our members.

Visa Europe is keen on advocating transparency on these commitments and the proposed regulation, to ensure that retailers understand the true impact on their bottom line.

Click here for more information on CBDIP.

The cross-border domestic interchange programme (CBDIP) will help retailers consolidate their structure and benefit from the improved commercial model for Visa acceptance compared to other forms of payment, which in turn will help increase loyalty and improve their customers’ experience.

The new more favourable commercial model will also help European retailers to adapt to and adopt new payments strategies much more quickly and will help to reduce and displace cash payments.

Cash by its very nature is not innovative. It does not give retailers any data insight around their customers´ behaviour and spending habits. Cash is less cost effective. Cash is not hygienic. Cash doesn’t increase the average transaction value, through impulse purchases and it cannot flex its form factor in the same way as cards.

In summary, we are confident that we can work together with all the players in the payment value chain to surf the wave and re-invent the retailer experience.

The infrastructure is already there and today in Europe there are more Visa cards than European adults (Visa surpassed 500 million cards in issuance in 2014), with €1 in every €6.00 spent on Visa in the region. Lets re-shape the payments landscape together.

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