In March 2016 we published guidance on the first parts of the IFR that were in force by December 2015.

We are now consulting for draft guidance on Phase 2 of the EU Interchange Fee Regulation (IFR), in the UK. This draft guidance explains how we will monitor and enforce the parts of the IFR that take effect from 9th June 2016.

We are seeking stakeholders’ views on our proposed guidance by Friday 8 July 2016.

What is the IFR?

On the 17 November 2015 HM Treasury confirmed the PSR as the competent authority and lead UK regulator for the IFR. The IFR is EU regulation that is directly applicable in the UK.

What are the key points?

This draft guidance sets out our proposed approach to monitoring and enforcing the second phase of the IFR.

It provides clarity on:

  • separation of payment card scheme and processing entities
  • co-badging and choice of payment brand or payment application
  • rules around the ‘honouring’ of all cards
  • gathering initial compliance reports from relevant parties
  • investigating complaints about non-compliance with the IFR

In addition, acquirers’ agreements with merchants must specify the amount of each Merchant Service Charge (MSC), and show separately the applicable interchange fee and scheme fees for each category and brand of payment cards.

This guidance will help to improve transparency for merchants by clarifying what they are paying for. The new transparency in the MSC should give merchants more clarity when negotiating fees with their bank.

The interpretation of what the IFR requires and how parties comply with it are ultimately questions of European law for the national and EU courts.

Who should read this paper?

This consultation is relevant to merchants, payment card schemes and their participants (operators, payment service providers and infrastructure providers) as well as those who use these services.

What are the next steps?

We would like to receive feedback on this draft guidance by 5.00pm on Friday 8 July 2016. We will review and consider the feedback and finalise our approach later in the year.
At that time, the final version of this guidance will be consolidated with Phase 1, the guidance we have already issued, and published as a complete guidance document.

How to respond?

You can respond by sending your comments to our consultation question by emailing us at:

Further information

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