Brussels, 7 March 2025 – Advocate General Richard de la Tour has issued an opinion clarifying the application of EU interchange fee regulations to three-party payment card schemes that incorporate co-branding partners.
The opinion, delivered in Case C-549/23 before the Court of Justice of the European Union (CJEU), underscores that net compensation received by co-branding partners is subject to interchange fee caps, even when those partners are not issuers themselves.
The case, referred by the Supreme Administrative Court for Trade and Industry of the Netherlands, concerns the interpretation of Regulation (EU) 2015/751, which sets limits on interchange fees for card-based transactions. The dispute involves American Express Europe SA, American Express Carte France SA, Visa Europe Ltd, and MasterCard Europe SA, among others, alongside the Dutch competition authority Autoriteit Consument en Markt (ACM) and airline Koninklijke Luchtvaart Maatschappij NV (KLM), with International Card Services BV as an intervening party.
Clarifying the Scope of Interchange Fee Caps
The opinion addresses how the regulation applies to three-party payment card schemes—such as American Express—that have co-branding arrangements with third parties. Under the regulation, three-party schemes that extend their model through external partnerships are treated equivalently to four-party schemes, which typically involve a separate issuing and acquiring bank.
AG de la Tour reaffirmed that net compensation—comprising payments, rebates, or incentives received by co-branding partners—falls within the scope of the interchange fee cap. This interpretation aligns with the regulation’s objective of ensuring competitive neutrality between different payment card models, promoting a more transparent and cost-effective payment system for merchants and consumers.
Key Legal Findings
- Interchange Fee Classification – The opinion confirms that net compensation received by a co-branding partner, even when it is not an issuer, qualifies as part of the interchange fee.
- Regulatory Compliance – Any form of remuneration that has an equivalent object or effect to an interchange fee must be treated as such under Article 5 of the regulation.
- Merchant Service Charge Exclusions – A merchant service charge cannot be deducted from net compensation received by a co-branding partner for assessing compliance with fee caps.
- Valuation of Services – The real economic value of services provided by a co-branding partner to a payment scheme must be considered when calculating net compensation, ensuring that non-monetary contributions are properly accounted for.
Implications for the Payment Industry
The AG’s opinion, while not binding, provides significant guidance for the CJEU’s upcoming ruling. If the Court follows the opinion, it could lead to stricter enforcement of interchange fee caps across hybrid three-party schemes, potentially impacting co-branded credit card arrangements involving airlines, retailers, and other major brands.
Regulators and payment networks will closely watch the final judgment, which could influence ongoing competition policy debates in the EU’s payments sector. The ruling may also shape how financial institutions structure co-branded partnerships to comply with EU law.
For now, industry stakeholders await the CJEU’s final decision, which will determine the extent to which interchange fee caps apply to complex co-branded payment card arrangements.
