Wed 04 / 02 / 15
Changes to processing charges for Visa Debit cards
Every company that accepts card payments will soon be affected by changes to the way card processing fees are charged.
What are the changes?
The European Union has had a long running battle with Visa and Mastercard to reduce interchange, the charge that is payable by your card processor/acquirer (Cardnet, Worldpay, Barclaycard etc.) to the bank who issued the card being charged. Interchange makes up about 90% of your card processor’s cost base, so it’s extremely important to them. They pass this cost on to you and it makes up the majority of your charge – if you currently pay 1.3% for credit cards, then about 0.9% is the recharge of the interchange.
Who will this affect?
From March 1st 2015 the new charges will come into effect for Visa Debit. For many this will result in an increase for the cost of their card transactions. The big losers will be those businesses where average transaction values are high, or those who take telephone transactions (CNP - customer not present) as these will now be deemed non-secure, even with CVV2/Address verification. Telephone transaction interchange charge is currently 10.5p, but will increase to 0.2% + 11p.
Auditel have seen a very recent example of the change where pricing is set to increase from a flat 11p per transaction currently, to 0.495% of the transaction value (i.e. 49.5p per £100 of card turnover). In this example all orders valued over £22.25 would incur higher fees and the fees payable on a £100 order would be 4.5x the current rates charged.
What can you do?
Now would be a good time to review your merchant card providers to see how you will be affected. Not all providers have announced how they plan to deal with the change in the market, but evidence so far has shown some profiteering. Keep an eye on your bills and make sure you fully understand the cost implications of any changes made by your provider to your charges. Auditel have been conducting reviews in this area for many years, so if you need any advice please get in touch.
Ian Hopping, Auditel UK.
You might also like:
If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk