In two rulings (C-304/16 and C-643/16) delivered on Wednesday 7 February, the European Court of Justice (ECJ) decided that a three party card scheme involving a co-branding partner or an agent - as used by American Express and Diners Club - is subject to the same restrictions as those applicable to four party schemes with respect to interchange fees introduced by Visa and MasterCard.
In the context of card payments, two models exist: 1) Four party schemes involve the participation of four parties: payments are made from the account of the consumer to the account of the merchant through the intermediation of the bank that issued the consumer’s card, and of the acquiring bank which provides the merchant with card acceptance services; 2) In three party schemes, as used by American Express, the acquiring and issuing services are provided by the scheme itself.
An ‘interchange fee’ is paid by the bank of the merchant to the bank of the acquirer involved in a card-based payment transaction. Regulation 2015/751 sets a limit on the amount (see EUROPE 11271).
This regulation provides that, when a three party payment card scheme, such as American Express, issues card-based payment instruments with a co-branding partner (‘the co-branding extension’) or through an agent (‘the agency extension’), it is considered to be a four party payment card scheme.
In Case C-304/16, the High Court of Justice (England & Wales), asks the Court of Justice whether it is a prerequisite of a three party payment card scheme being considered to be a four party payment card scheme and, as a consequence, subject to the interchange fee caps laid down by the regulation.
The Court answers in the affirmative.
In Case C-643/16, the High Court asks whether, in the event that a three party payment system enters into co-branding arrangements or makes use of an agent, that system is subject to the access obligation laid down by the directive, where the co-branding partner does not itself provide payment services within that system or where the agent acts on behalf of the system in providing payment services.
The Court considers that a three party payment card scheme that has entered into a co-branding arrangement is not subject to the access obligation laid down by the directive in a situation where that co-branding partner is not a payment services provider and does not provide payment services within that scheme with respect to the co-branded products.
However, a three party payment card scheme that makes use of an agent for the purposes of supplying payment services is subject to the access obligation laid down by the directive. (Original version in French by Mathieu Bion)