2 PAYMENT METHOD PROFILES: CARD
Data Pass-Through (i.e., downgrades) In some markets, interchange rates may be lower for transactions that meet certain qualification criteria. For example, in the United States, a consumer credit card may qualify for lower interchange rates if the transaction adheres to certain criteria, such as whether the transaction’s purchase date is made within one day of the authorization date and whether settlement is made within two days of the transaction date. 187 In addition, merchants may receive interchange benefits on commercial card transactions if they pass through certain data elements such as sales tax, item description, quantity, and other factors. 188 Considerations Around Network Rules Not only do networks set interchange and network fees, but they are also responsible for setting some rules that can create operational challenges for merchants. Considerations including surcharging, restrictions on discounting for cash, limitations on minimum/maximum transaction amounts, Honor All Cards rules, data security and compliance, chargeback rules and liabilities, and branding and display requirements are some of the most impactful network rules facing retailers. (See Table 3 in the Appendix for an outline of these network rule considerations.) Acquirer Set Fees In addition to network-set fees, merchants pay fees to their acquirer or processor for payment processing services, payment acceptance hardware, and value-added services. (See Table 4 in the Appendix for an outline of different services a merchant may pay to their processing partner.) Regulation Surcharging Surcharging regulation is mixed and varied across global markets. While only one market (Australia) has guaranteed surcharging rights for all types of card transactions (as of July 2025) xii , markets like the U.S. and Canada have permitted surcharging for only credit card transactions, with limitations on the size of the surcharge. Even more restrictive, Europe and the UK have prohibited surcharging on interchange-regulated card types, permitting a surcharge only on non-interchange regulated cards, such as commercial or internationally-issued cards. Of the 20 countries reviewed, Australia, Canada, and the United States have some surcharging rights for merchants – although these rights vary extensively. The European Union’s PSD2 ban on surcharging has certain exceptions and allows for Members States to extend their own surcharge bans. In Chile, Transbank automatically applies a surcharge to Visa and Mastercard credit cards without the involvement of the merchant. 189 In some jurisdictions, surcharging rules are governed by the card networks, while in others there is government oversight, and in others it may be a combination of both. In Canada and Australia, governments require consumer transparency and cap surcharge fees with guidance available in the latter via the Australian Competition Commission. 190 In July 2025, the Reserve Bank of Australia has proposed removing the current surcharging framework which may be followed by card networks reimposing “no-surcharge” rules. 191
xii The rules around surcharging, interchange caps, and other elements of the payment systems regulation in Australia are currently under review by the Reserve Bank of Australia, and these rules may change prior to publication of the State of the Industry Report, drafted as of December 2024.
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