Card processing fees for merchants to change in 2015 > News Smarter Spending > www.expense-reduction.co.uk > News As a merchant, you face major changes to the cost of processing your card payments as of March 1st this year. The changes are being phased in throughout 2015 and 2016, with Visa going first from 1st March and MasterCard following on for some of their card types on the 1st April, then quarterly thereafter. A major component of card payment costs is ‘Interchange’. Driven by EU regulations, the aim of the legislation is to cap interchange fees throughout Europe; for debit cards the cap will be 0.2% (currently 8p) and for credit cards 0.3% (currently 0.77 – 0.8%) for chip and pin UK-based consumer transactions. But will it mean lower card processing fees for UK businesses? Recent tenders have shown, supported by conversations with both clients and suppliers that some major suppliers are unlikely to pass on savings to their customers in the foreseeable future. The reality is that whilst there will be some winners, there are likely to be losers as well. For example we’ve already demonstrated potential savings ranging from 30% for some clients and increases of 30% for others, so it is important to understand the likely impact before approaching your supplier to seek a change. Merchants tend to be on blended rates with the suppliers, meaning that transaction charges are levied against their account based on perhaps 5 to 15 rates, as opposed to the many hundreds of variations faced by their supplier; so it’s a complicated picture. Many businesses, not just retailers and restaurants take card payments these days. If you take card payments within your business, you’re classified as a merchant. Establishing how these changes are going to affect your business can require additional data and lots of complicated analysis, but there are a number of things you can do to help your case: • Look out for non-secure payment surcharges on your invoices. Although Visa has withdrawn the pricing differential for telephone and mail order based payments on debit cards from 1st March, many acquirers continue to charge a premium where the 3 digit CVV code is not processed. • Read any notification you receive advising you of your rate change. Remember that this could be attached as a note within your monthly invoices. • Key questions to ask yourself: • Am I being given the full reduction? • Is my increase fair? • Am I on a fair rate to begin with? • If you have not heard from your supplier by April, assess whether they are taking increased margin, rather than passing on savings. ERA’s specialist Payments Team have already advised many clients on strategies to optimise their cost and service provision in anticipation of these changes.

Card fees - changes in 2015

Download PDF Report

Upload
simon-webb
View
24
Download
0

Embed Size (px)

Citation preview

Card processing fees for merchants to change in 2015 > News

Smarter Spending > www.expense-reduction.co.uk > News

As a merchant, you face major changes to the cost of processing your card payments as of March 1st this year.

The changes are being phased in throughout 2015 and 2016, with Visa going first from 1st March and MasterCard following on for some of their card types on the 1st April, then quarterly thereafter.

A major component of card payment costs is ‘Interchange’. Driven by EU regulations, the aim of the legislation is to cap interchange fees throughout Europe; for debit cards the cap will be 0.2% (currently 8p) and for credit cards 0.3% (currently 0.77 – 0.8%) for chip and pin UK-based consumer transactions.

But will it mean lower card processing fees for UK businesses?

Recent tenders have shown, supported by conversations with both clients and suppliers that some major suppliers are unlikely to pass on savings to their customers in the foreseeable future.

The reality is that whilst there will be some winners, there are likely to be losers as well. For example we’ve already demonstrated potential savings ranging from 30% for some clients and increases of 30% for others, so it is important to understand the likely impact before approaching your supplier to seek a change.

Merchants tend to be on blended rates with the suppliers, meaning that transaction charges are levied against their account based on perhaps 5 to 15 rates, as opposed to the many hundreds of variations faced by their supplier; so it’s a complicated picture.

Many businesses, not just retailers and restaurants take card payments these days. If you take card payments within your business, you’re classified as a merchant.

Establishing how these changes are going to affect your business can require additional data and lots of complicated analysis, but there are a number of things you can do to help your case:

• Look out for non-secure payment surcharges on your invoices.

Although Visa has withdrawn the pricing differential for telephone and mail order based payments on debit cards from 1st March, many acquirers continue to charge a premium where the 3 digit CVV code is not processed.

• Read any notification you receive advising you of your rate change.

Remember that this could be attached as a note within your monthly invoices.

• Key questions to ask yourself:

• Am I being given the full reduction?

• Is my increase fair?

• Am I on a fair rate to begin with?

• If you have not heard from your supplier by April, assess whether they are taking increased margin, rather than passing on savings.

ERA’s specialist Payments Team have already advised many clients on strategies to optimise their cost and service provision in anticipation of these changes.