Banking News

Swiss Credit Cards: Interchange Fees Drop

December 15, 2014 - Benjamin Manz

The interchange fees levied on Visa and MasterCard credit card transactions in Switzerland will be decreased from the current 0.95% to 0.7% by August 1, 2015, and to 0.44% by August 1, 2017. That means transaction fees will go down by more than half.

This conclusion was reached by the Swiss Competition Commission and relevant credit card companies. The goal of the Competition Commission is to lower interchange fees to a level at which retailers would no longer need to differentiate between cash and credit card payments.

The interchange fee is charged by acquirers like SIX, Aduno or ConCardis to card issuers like Swisscard, UBS, Cembra Money Bank, Cornèrcard or Viseca when cardholders use credit cards to make payments. In Switzerland, interchange fees cannot be charged for payments made with debit cards (like Maestro).

In the end, interchange fees are passed on to retailers. A number of retailers, in turn, pass on the fees to customers, either in the form of higher prices or as a markup on the cash price for payments made using credit cards.

The Commission estimates that the card fee burden carried by Swiss retailers may be reduced by as much as 50 to 60 million francs per year. Other estimates place possible savings at 90 million francs.

What does that mean for Swiss consumers?

The Commission’s decision to lower interchange fees may also positively affect consumers.

For one thing, many retailers already do not pass on the costs of credit card transactions to consumers. A number of retailers have committed to passing savings on to consumers in the form of lower prices. However, due to the numbers in question, any possible price reductions would be negligible.

Another point is that lower interchange fees will result in millions of francs of lost revenues for credit card companies. Several issuers have already announced that they are considering raising the credit card fees which they charge to cardholders.

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Expert Benjamin Manz
Benjamin Manz is CEO of and an independent expert on banking and finance.