Since the introduction of the European Union’s Interchange Fee Regulation (IFR) in 2016, credit card issuers have suffered the most from the reduction to 0.3%. The average EU interchange fee fell by over 50%, creating significant revenue losses for issuers. This in turn forced credit card issuers to reduce loyalty and cash-back programs and introduce card fees. Issuers in the U.K., which is the largest EU card market, suffered the most. Debit card issuers were less affected by the Regulation.
On 1 July 2017, Australia’s RBA capped interchange fees on credit cards at 0.6%, which were previously set at 1.5%-1.7%. Banks compensated for the subsequent losses by reducing the value of rewards programs.