Interchange is the fee typically paid by the retailer’s bank to the cardholder’s bank every time a Visa card is used. It should not be confused with the fees paid by retailers to their banks. Following a transaction, the retailer’s bank pays a fee to the cardholder’s bank. This helps banks share the costs of issuing Visa cards and the cost of signing up retailers to accept those cards. Interchange enables cardholders, retailers and their banks to participate in the transaction process. Further information can be found in the glossary section of the website
Visa regulations include a no surcharging rule, however local laws in each European country may specifically allow retailers to surcharge. However, in countries where surcharging is permitted, very few retailers and businesses impose it as they recognise it discourages custom. Furthermore, most retailers benefit from card payments in a number of ways including: cost savings – no need to count, store and collect cash; and increased security - for example chip and PIN which has more than halved fraud levels since it was introduced; and a reduction in losses of cash from till.
With the implementation of the Payment Services Directive (PSD) – a regulatory initiative from the European Commission to regulate payment services and payment service providers, as part of the goal of achieving a Single Euro Payment Area (SEPA) - countries are obliged to legislate on whether surcharging is permissible or not. National Governments are working on transporting the directive into law, and countries are at various stages of this. Any countries that opt to permit surcharging will implicitly encourage the use of cash, which for society at large, is a more expensive and more insecure payment mechanism.