Interchange Fees
The level of the Merchant Discount Rate (MDR) in Aruba is a matter of concern for many merchants operating on the island. The largest component of the MDR consists of the Multilateral Interchange Fee (MIF). MIFs are determined by card schemes and must be paid by acquirers to issuers for every card transaction. Consequently, they influence the cost structure of merchants and, ultimately, the prices consumers pay for goods and services.
The terms and fees applied by Aruban commercial banks do not deviate from those set out in the general conditions issued by the card schemes, despite the flexibility that exists to agree on lower Interchange Fees (IFs):
Bilateral Agreements
The general conditions of the card schemes whose cards are issued in Aruba provide room to deviate from the standard MIFs. Banks may enter into bilateral agreements in which they mutually agree to apply a lower IF to transactions carried out between their respective customers. MIFs are “default fees” and apply only in the absence of such bilateral arrangements.
Although it is therefore possible for banks to negotiate lower IFs than those mandated by card schemes, this rarely occurs in practice, as individual banks face significant challenges in establishing agreements with the large number of banks worldwide. However, for a small market such as Aruba, establishing bilateral IF agreements for domestic transactions is a possibility that could reduce costs for merchants and, indirectly, for consumers.
National Legislation and Regulation
Lower MIFs can also be imposed through national laws and regulations. Several countries have done so through legislative action, resulting in MIF levels that are significantly lower than the pre‑regulation rates. AFTA therefore recommends that Aruba adopt regulatory measures governing the level of MIFs.
Decisions by the European Commission and European case law indicate that card schemes and issuing banks have structural incentives to maintain high IFs and to promote the use of payment cards. Whether a bank benefits financially from high IFs depends on whether it primarily acts as an issuer or as an acquirer. Given the small size of the local population relative to the number of annual tourists, and the relatively greater spending by tourists compared to locals, Aruban banks act far more frequently as acquirers. Issuers, by contrast, are mostly foreign banks. As a result, high IFs are not advantageous for Aruban commercial banks.
The need for MIF regulation in Aruba becomes even more apparent when considering the effect of international MIF regulations on local banks. When an Aruban resident uses a local debit or credit card within the European Union, their bank — acting as issuer — receives a MIF of 0.2% for debit card transactions and 0.3% for credit card transactions. Conversely, when tourists transact in Aruba, Aruban banks as acquirers must pay substantially higher MIFs to foreign issuers under the rules currently imposed by card schemes. If Aruba were to adopt regulations similar to those of the EU, Aruban acquirers would pay only 0.2% on international debit card transactions and 0.3% on credit card transactions, instead of the much higher current rates. Given Aruba’s position with respect to MIFs and the predominance of Aruban banks’ role as acquirers rather than issuers, AFTA emphasizes the importance of implementing MIF regulation.
The “Honor All Cards Rule”
The Honor All Cards Rule (HACR), imposed by card schemes, limits the ability of merchants to manage their payment costs. Introducing regulation that restricts the scope of the HACR could alleviate this issue. Under Article 10 of the Interchange Fee Regulation (IFR), merchants cannot be required to accept all cards from a single brand if this obliges them to incur higher costs. As a result, merchants may, for example, refuse premium cards to manage cost exposure.
In the United States, the HACR has been central to long‑standing antitrust proceedings. In November 2025, a settlement between Mastercard/Visa and merchants was announced under which the HACR will be relaxed: merchants may refuse premium and commercial cards and accept only lower‑cost standard cards. They will also have greater flexibility in applying surcharges on expensive card types. Additionally, IFs will be reduced, and standard cards will be subject to a fee cap of 1.25% for eight years. This sets a precedent demonstrating that relaxation of the HACR is both legally and economically feasible.
Restricting the HACR in Aruba would strengthen merchants’ bargaining power and improve their ability to manage payment‑related costs. It would also promote greater competition among card issuers.
Transparency Requirements
Consumers and merchants are not always fully aware of the costs associated with payment services. Research by AFTA indicates that merchants often lack information about the composition of the MDR, including the level of the MIF. Increased transparency can help to address this issue.
Measures to enhance transparency may include requirements for commercial banks to periodically (e.g., annually) provide customers—including merchants—with detailed information on the cost structure of their payment service products. Such disclosures would give customers insight into how the fees charged are determined. Banks could also be required to publish current fee structures in a standardized format, enabling customers to compare products more effectively.
AFTA calls upon the banks to jointly develop a standardized, periodic reporting framework covering their payment service cost structures. AFTA proposes to play a facilitating role in designing a practical and widely supported reporting methodology, ensuring that any collaboration remains strictly within what is necessary and complies fully with competition law.
Promoting Competition in the Market for Payment Services
The development and expansion of alternative payment methods stimulate competition in the payments market and can help reduce the cost of payment transactions. Banks can play an important role in this development by collaborating with each other and with providers of innovative payment services. Should AFTA identify barriers that hinder market entry for payment services providers, it will conduct further investigation.
