Morocco Cuts Card Fees to Spur Digital Payments, but Uncertainty Remains

From October 1st, card payments will be cheaper for merchants in Morocco. By lowering the interchange fee cap to 0.50%, and to just 0.15% for local shops and public services, Bank Al-Maghrib hopes to accelerate the digitization of payments. However, between the lack of obligation to pass on the reduction, classification difficulties, and the exclusion of foreign cards, the reform is already raising numerous questions.

Fees on electronic payments have been reduced. A regulatory decision issued on July 6th by Bank Al-Maghrib (BAM) redefines the financial balance of card payments in Morocco. By lowering the general cap on domestic electronic interchange fees from 0.65% to 0.50% (excluding VAT), and by establishing a preferential rate of 0.15% (excluding VAT) for government services (e-government) and local merchants, the central bank aims to trigger a simplification drive to accelerate the digitalization of the retail economy.

This reform, applicable from October 1st, directly changes the rules of the game for issuing banks and acquiring banks in Morocco.

A Rate Reduction Without Guarantee of Automatic Pass-Through:

The central question surrounding this reduction in caps concerns the direct impact on merchants’ cost structure. Will acquirers restructure their global commission (MSC) offerings or retain the margin generated by the lower interchange fee? “We still remember the historic decision made by BAM on September 28th, 2024. This decision lowered the cap on interchange fees for domestic electronic payments from 1.20% (excluding VAT) to 0.65%. It was a very significant decision due to its scale.

The banks in Morocco, which benefit from this interchange fee, accepted a very substantial reduction of around 46%,” recalls Ismail Bellali, former head of the Interbank Electronic Payment Center (CMI) and founder of UNIPAY.MA, an electronic payments consulting firm.

History has shown that merchants have fully benefited from this reduction in payment fees charged by their payment processors. That said, there hasn’t been a dramatic increase in merchants’ enthusiasm for adopting digital payments. The regulator’s objective is to give points of sale greater financial flexibility.

When asked about the likely behavior of financial institutions in the face of this change, Ismail Bellali reiterated the reality of the legal framework: “This reduction has the noble objective of giving merchants more leeway by allowing them to apply these rates. However, payment processors are under no obligation to pass on this reduction directly to businesses.”

The lack of strict legal constraints on the final commission paid by the merchant leaves the door open to several commercial arrangements. The expert identifies three distinct scenarios: the difference is left entirely to the merchants, or it is shared with two-thirds going to the merchants and one-third to improve the merchant’s margin, or the difference is kept entirely by the financial institution.

This initial ambiguity could generate a period of instability in Morocco, even though our specialist believes that competitive forces will eventually impose harmonization. “The market will eventually self-regulate; we can trust it,” he says, while emphasizing that it will be necessary to closely monitor the banks’ reactions to “avoid repeating what happened in 2024.” Despite this lack of obligation, merchant operators are strongly encouraged to pass on the entire reduction to local businesses and e-government services.

The Puzzle of Classifying Local Businesses:

Implementing the circular relies on a strict distinction between types of businesses. To benefit from the minimum rate of 0.15%, a physical point of sale must meet specific tax criteria: annual turnover of 500,000 DH or less for self-employed individuals, or 2 million DH or less for individuals subject to the single professional contribution scheme. Legal entities, franchises, and large retailers are explicitly excluded.

This segmentation raises the question of the technical feasibility of updating Merchant Category Codes (MCCs) by acquirers. How can banks audit and classify thousands of small tax profiles on an industrial scale? Ismail Bellali doesn’t hide the complexities of implementing this measure. For him, “this aspect will be difficult to manage and remains uncontrollable.”

Identifying and monitoring the revenue thresholds of independent retailers requires data synchronization that goes beyond the traditional payment processing capabilities of acquirers. Indeed, verifying the tax eligibility of thousands of small retail outlets and preventing windfall gains or classification fraud is a major operational challenge.

The exclusion of international transactions: a two-speed market

The third issue raised by BAM’s decision lies in its territorial scope. The circular excludes ATM withdrawals, tri-party card networks such as American Express, and all transactions made with bank cards issued abroad. This exclusion raises the question of a possible distortion in payment acceptance, particularly in tourist areas where fees remain very high.

When asked whether this regulatory segmentation risks penalizing strategic sectors such as tourism, by encouraging merchants to refuse international cards, Ismail Bellali points out that the circular does not create a break, but endorses a de facto situation: “there is already a two-speed market,” he explains.

The exclusion of international flows from the regulatory reduction is explained by cross-border clearing mechanisms over which the national central bank has no direct control. The expert points out the reality of the costs borne by local operators: “The average commission rate that Moroccan institutions must pay to foreign issuers is around 1.7%. And the circular doesn’t address them.”

Towards a Forced Restructuring of the National Payment System Landscape in Morocco

The entry into force of this reform on October 1st, 2026, will require the entire ecosystem to adapt its contractual and technical infrastructure. BAM now imposes complete transparency on acquirers, obligating them to provide pricing schedules and reports monitoring compliance with spending limits. The law also prohibits any passing on of these fees to the end customer; the payer must not bear any additional costs.

The economic viability of the pure acquisition model in Morocco is directly challenged by this decline in interchange revenues. If issuing banks lose some of their retention gains, the incentive to issue new cards could weaken. As for acquirers, they will have to find new value drivers beyond the simple physical transaction. This rate decrease therefore constitutes a resilience test.

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(Featured image by Nathana Rebouças via Unsplash)

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First published in LES ECO.ma. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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