Reduction In Interchange Fees Update

Reduction In Interchange Fees Update

November 21st, 2015

Members will be aware that the Minister for Finance suggested that his Department has calculated that existing merchants will collectively save in excess of €36 million per year when the new reductions to charges for debit and credit cards are made by Visa and MasterCard from December 09th this year.

The majority of merchants will not be advised by these card issuers that they are to benefit from this Ministerial intervention.  It is in your interest that you seek a new tariff of charges from your merchant service provider and satisfy yourself that not only are you benefitting from these reductions on both Debit and Credit card processing, but that there are no attempts by either the provider or the card issuers to increase charges or fees for other services contained within your merchant agreement such as terminal rental, PCI Compliance and non-compliance fees or new charges for ‘services’.

The Association has an exceptionally good Deal through CSNA Deals with Worldpay.  We will be publishing their new rates next week once the card issuers have approved the new charges.

Our society is moving slowly towards a less cash society – electronic payments are part of the new regime.  Contactless Debit cards will become more frequently the choice of payment for many of your customers, particularly with the increase (from €15 to €30) in the maximum spend available on these cards (in the UK it is £30).  Pins are not required by the cardholder.

Most payment terminals can accept contactless cards (which have a lower fee than chip & pin Debit cards processed) – every retailer should ensure that their terminal is capable of accepting the cards – reconciliation is the same as credit or debit cards.

Over the next few weeks, the Association, in conjunction with other retail organisations and the Department of Finance will be encouraging retailers and consumers to move away from cash in favour of electronic solutions – it is in our interest to provide the least expensive (contactless) option to minimise our own costs.  It is anticipated that the recent decision by the Minister to place a 12 cent charge on each ATM transactions will accelerate the “move to plastic”.

Two issues regarding perceived consumer barriers need to be considered – refusal to accept cards unless a transaction exceeds a minimum spend and surcharging the customer choosing to pay by card.  These are separate issues and should be considered differently.

Some retailers refuse to accept payment by card if the value of the product or the profit earned from the sale of the product is significantly reduced (or even wiped out) from the fees paid to their merchant service provider.

Others accept payment by card once they receive a surcharge (an additional payment) from the customer to cover the cost of the fees incurred.

Refusing to accept payment by card is not prohibited by Law but is contrary to Terms and Conditions of acceptance of Visa and MasterCard by those card issuers.  They would say that “if you wish to accept our cards from our customers, you cannot pick and choose the circumstances under which you will accept these cards”.

Levying a surcharge (or additional fee) to a customer paying by plastic card is legal, in fact it is specifically provided for through both European and Irish Directives and Statutory Instruments respectively.  A retailer charging a surcharge is permitted to recoup the actual cost of their fees – In so doing, you can only be justified in collecting amounts charged to you, you cannot add extra charges over and above your actual cost or use the surcharge as a profit source.

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