Several regulations setting maximum levels for interchange fees have entered the legal system recently. It is already clear that these regulations are having a major impact on the market, causing some enterprises to revise their business model. An interesting issue from the point of view of the law of new technologies is whether these regulations are technologically neutral, or apply only to a selected group of payment instruments.
This issue comes as no accident. The consequences exerted by the regulations concerning interchange fees in key definitions for the concept of a payment card, despite the existence in the legal system of the concept of a payment instrument, is puzzling. This is because the concept of payment instruments is the most fundamental concept concerning instruments used to initiate payment. It was introduced by the Payment Services Directive (2007/64/EC) and in Poland by the Payment Services Act of 19 August 2011. It covers “any personalised device(s) and/ or set of procedures agreed between the payment service user and the payment service provider and used by the payment service user in order to initiate a payment order.” As is apparent, this definition is unusually broad and technologically neutral. Does the fact that the relevant regulations concerning interchange fees do not refer to this definition mean that these regulations apply only to certain payment instruments?
The importance of the answer to this question is readily imaginable. If the regulations on the level of interchange fees are limited in scope, it would mean that the fixed limits on interchange fees do not apply to certain types of payment instruments, which in turn would (at least theoretically) permit the issuers of those instruments to charge fees higher than the maximum interchange rates. A key definition for this question in the Payment Services Act (i.e. the definition of interchange fees) refers to fees for payment transactions performed using a payment card. So there is a direct reference to payment cards, not payment instruments. The definition of a payment card doesn’t explain much; it refers to “a card permitting a payout of cash or enabling placement of a payment order via a merchant or acquirer, accepted by the merchant in order for it to receive the funds it is due.”
It is difficult to determine unequivocally whether, for example, under this definition a payment card must be in tangible form, or if the definition may also cover virtual cards. But assuming that the legislature had a rational purpose, it should be accepted that a payment card and a payment instrument are not identical concepts. “Payment card” appears to be a narrower concept. This in turn suggests that not every payment instrument is a payment card, and the restrictions on interchange fees do not apply to every payment instrument (or more precisely, in the case of payment instruments other than payment cards, fees charged for use of the instrument will not qualify as interchange fees).
The Polish Payment Services Act is not the only law at this time governing interchange fees. The EU’s Interchange Regulation (2015/751) has been in force since 8 June 2015 (although some of the key provisions of the regulation, including those setting maximum levels of interchange fees, will not enter into force until 9 December 2015).
The situation is somewhat more complicated under the Interchange Regulation. The key concept here is that of a “card-based payment transaction.” Art. 1 of the regulation expressly provides that the regulation applies to these transactions. The definition of such transactions is quite extensive, but notably refers to “a service based on a payment card scheme’s infrastructure and business rules to make a payment transaction by means of any card, telecommunication, digital or IT device or software….” Unlike the Polish act, the Interchange Regulation appears to cover payment solutions using various technologies. In this sense, the regulation is clearly more open to new technologies. The term “card” as used in the regulation therefore means not so much a concrete type of payment instrument (a plastic card) as a specific scheme for payments.
In short, it should be concluded that—as a rule—after entry into force of the rules set forth in the Interchange Regulation limiting the amount of these fees, the limits will also apply to fees charged for using the latest payment instruments, including virtual instruments.