Europe's payment rules shift in 2025
Credit card fees in the European Union changed significantly in 2025 following updates to the EU's Payment Services Regulation (PSR2). The primary goal is to reduce payment processing costs for businesses and strengthen consumer protection across member states.
These changes follow several years of complaints from retailers regarding high card processing fees especially for cross border transactions.
According to the European Commission’s internal market report, merchant service fees for card payments rose by 9 percent between 2022 and 2024 despite existing fee caps.
What changed in 2025?
The new regulations include:
- Lower interchange fee caps for credit cards
- Reduced cross border payment fees
- Stronger refund rights for consumers
- Clearer disclosure requirements for lenders
Interchange fees are now capped at 0.20 percent for debit cards and 0.30 percent for credit cards across the EU which brings consistency to the market.
Why the EU made the changes
The European Commission aims to:
- Reduce costs for small and medium businesses
- Increase transparency in payment services
- Encourage competition between banks
- Support cross border trade within the EU
Lower merchant fees could help reduce prices for consumers although the impact depends on individual retailers.
Impact on consumers
The most noticeable benefits for consumers include:
- Lower foreign transaction fees
- Improved refund rights for disputed transactions
- Clearer interest rate disclosure
- Stronger fraud protection rules
Foreign transaction fees for purchases within the EU are now limited to transparent cost based pricing which removes hidden surcharges in many cases.
Will credit card rewards change?
Lower interchange fees reduce revenue for card issuers which may lead to changes in reward programs. Banks could:
- Reduce cashback percentages
- Increase annual card fees
- Limit reward eligibility
However competition among major European banks and fintech providers may keep reward programs attractive especially premium cards aimed at frequent travellers.
Business impact
Retailers are expected to see the biggest direct savings from reduced merchant service fees. This could improve margins for smaller businesses that rely heavily on card payments.
Cross border payments
One of the most significant changes affects cross border payments. Fees for processing transactions between EU member states must now match domestic payment fee levels which removes a major cost barrier for online sellers.
Example: Cross border card fee 2024: 1.2% New regulated fee 2025: 0.30% Savings: 0.90%
Consumer risks
There are potential downsides including:
- Reduced availability of premium reward cards
- Higher interest rates for some borrowers
- New annual card fees
Banks may adjust pricing structures to replace lost interchange revenue although the extent will vary.
What should consumers do?
Consider reviewing:
- Annual card fees
- Interest rates
- Reward program changes
- Foreign transaction fees
Switching to lower cost cards may provide savings for many users.
Bottom line
The EU’s 2025 credit card fee regulations aim to lower costs for businesses and strengthen consumer protections. The overall impact will depend on how banks adjust because reduced interchange revenue may influence card pricing and reward structures.
Consumers should monitor card terms closely and compare available products to ensure they continue to receive good value.
This article is general information only and does not constitute financial, investment, legal, or tax advice. It does not consider your objectives, financial situation, or needs. You may wish to seek personalised advice from a licensed professional before making financial decisions.