The document discusses upcoming changes to card processing fees for merchants in the UK. Starting in March 2015, interchange fees that merchants pay to accept debit and credit cards will be capped under new EU regulations. This aims to lower the fees from their current rates of 0.8% for credit cards and 8p for debit cards to 0.3% and 0.2%, respectively. However, while some merchants may see lower fees, others may see increases of up to 30% as payment suppliers adjust their rates in response to the regulatory changes. It is advised that merchants understand how the changes may impact their individual processing costs.

1. Card processing fees for
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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.