With reductions of 30% available in the cost of accepting Visa & MasterCard personal and premium credit cards, you could be saving over £400 for every £100,000 of personal credit cards you accept as payment from your customers. Depending on your current charges this could be significantly higher, particularly if you’re being charged a much higher rate for premium personal cards which can often be the case.
Why are the changes taking place?
In 2015 EU regulation came into place to align charges for processing card payments in the European Economic Area (EEA). The most recent being on 9th December 2015 which impacted on interchange rates across Europe as all EU countries aligned their domestic credit card (0.3%) and debit card (0.2%+1p) interchange rates.
This phase of regulation is designed to increase transparency of fees to merchants and lead to lower costs at the point of sale for consumers.
Your merchant services provider however is not restricted under the EU ruling in what they decide to charge your business! The unusual thing about the EU regulation is that although your merchant service provider might be charging you 1.3% for example on a consumer credit card transaction, they have no obligation to pass on the interchange reduction and reduce this fee to a fairer level of circa 0.9%.
As a result it’s a good time for a business to review merchant services and also consider other pricing options.
So, what should you be doing?
Be alert and know what you’re paying – Now is the time to read carefully any correspondence you receive from your merchant services provider. In particular, check your merchant services statement in the first few months of 2016 to see if the lower charges have been offered or applied.
“Marry in haste, repent at leisure” – Contracts can be for up to 5 years and although you can move your card processing the cost of cancelling is very likely to be prohibitive. So, before signing any new contracts or signing with a new merchant services provider, whether directly or through a sales agent – ensure you find out what their policy is re capping large debit card transactions which are now also charged as a percentage and whether they will pass on the credit card reductions due.
Seek independent expert advice – Be careful not to use a broker or sales organisation which is potentially conflicted. Now is the time not to be sold headline rates and the service element really matters, more than ever before. A good specialist should ensure that debit card caps are provided, that lower rates are applied for low transaction amounts, and that you secure the reductions in credit card pricing when these happen. They will know in advance and rather than just alerting you and they should use their muscle to ensure you benefit when rates are changing.