What you need to know about UAE’s new interchange fee rules

Effective October 1, 2024, the Central Bank of the UAE (CBUAE) has introduced new regulations for Interchange Reimbursement Fees (IRF) and Merchant Discount Rates (MDR).

These updates will improve the payments' ecosystem to benefit you, as a merchant in the UAE. If you're wondering how your payment processing costs might be affected, we're here to provide clarity. To help explain what’s different and how it impacts you, we sat down with Mahmoud Ismail, our Chief of Staff & Vice President of Payments, and Heba Sherif, our Head of Compliance, to answer key questions such as:

• What exactly is changing with IRF?

• Why do these changes matter?

• How will Mastercard and Visa rates be affected?

• What is the impact on merchants?

• How does Adyen support its merchants through this transition?

The CBUAE has conducted a thorough review of IRF rates, comparing practices regionally and globally. The goal? To align the UAE’s payment system with international standards and boost economic growth.

Here’s what’s new:

• Updated IRF Structure: All card acquirers and schemes must adopt the new IRF structure for domestic consumer debit and prepaid card transactions, whether in-store or online.

• POS and E-commerce Transactions: Whether your customer taps a card at your store or buys online, the new rates apply to all locally issued debit and prepaid cards.

• No Change for Credit Cards: Credit card rates stay the same as per Visa and Mastercard pricing, but the Central Bank will monitor them closely.

As a merchant, you’re likely familiar with Merchant Discount Rates (MDR), which are the fees you pay for accepting card payments. The Central Bank is keeping a close eye on acquirers to make sure any savings from the new IRF structure are passed on to you. This means lower costs when accepting domestic consumer debit and prepaid cards.

Also, card acquirers must now clearly separate fees for debit, prepaid, and credit cards. This increased transparency ensures you know exactly what you’re paying for, no more blended rates. At Adyen, we don’t offer blended pricing, instead we offer a pricing model that brings in more transparency (see image below). To read more about Adyen’s pricing in the UAE, and how it benefits merchants, check out Stay ahead with Adyen's pricing model blog.

These updates are designed to make fees simpler and more predictable, benefiting both merchants and the UAE’s growing economy. For merchants, this means clearer cost structures and potentially lower fees for certain payments.

From October 1, 2024, Mastercard and Visa are adjusting their domestic interchange rates for Consumer Debit and Prepaid transactions. Here’s a quick look at what’s new:

Mastercard’s Updates

• Special Merchant Segments: Sectors like Government, Transport, and Real Estate will benefit from competitive rates with capped fees.

  • For example, in Government and Transport, the rate remains at 0.50% with a cap of AED 25, while Real Estate transactions are capped at AED 32.50.

• General Prepaid Cards: For prepaid cards like Consumer Standard, Gold, Titanium, and Platinum, rates will be capped at 1.00% or AED 50.

Visa’s Updates

• Special Merchant Segments: Like Mastercard, Visa will also offer capped rates for key sectors such as Government, Transport, and Petrol at 0.50%, capped at AED 25. Real Estate is capped at AED 32.50, while Charity transactions are capped at just AED 1.

General Prepaid and Debit Cards: For other consumer debit and prepaid cards, Visa’s new rates are 0.75%, capped at AED 37.50 for in-person transactions, and 1.00%, capped at AED 50 for online payments.

At Adyen, we’re always committed to transparency. With our Interchange++ pricing, these new rates will be automatically applied to our merchants’ transactions starting October 1, 2024. We work closely with our merchants to ensure they have a clear understanding of costs and benefit from the new regulations. 

Want to discuss more about Adyen’s pricing model and how it can benefit your business? Feel free to reach out to us here.