PaymentSense, one of the UK’s larger ISO’s, has written to its merchants advising of significant fee increases following recent changes to Visa debit interchange costs. And following the old saying “You might as well be hung for a sheep as a lamb” they have really gone for it with extensive price increases far higher than the changes in interchange costs. This will undoubtedly infuriate thousands of PaymentSense customers who may feel this is a breach of PaymentSense’s “Capped fees for the duration of your contract” promise. We take a look at the typical fee increases in their letters and shine a little more light on their “Capped fee” promise.
Summary of the Increases
|Visa debit chip and pin||0.2% of transaction value (no cap) + old rate|
|Visa debit telephone||0.2% of transaction value + 50p (no cap) + old rate|
|Non-qualifying credit cards||0.5% of transaction value + old rate|
|Account on file charge||£47.88 per year|
|Authorisation fees||3.85p per transaction|
Fee Increase Letter
Visa debit card increases
- Chip and pin – rates are increasing by 0.2% (on top of your existing rate) whereas interchange costs have only increased by 0.2% less 7p. So customers are paying an extra 7p per transaction in excess of interchange costs payable to Visa Europe. In the case of business debit the extra is actually 10p.
- Telephone /non-secure e-commerce – rates are increasing by 50p in excess of the chip and pin rates whereas interchange costs have only increased by 7.5p. So customers are paying an extra 49.5p (50p – 7.5p + 7p) in excess of interchange costs payable to Visa Europe (or 52.5p in the case of business debit). PaymentSense confirmed to us that this increase applies to all telephone transactions, even if CVV2 data is captured.
- Interchange cap – interchange payable to Visa Europe is capped at 50p for chip and pin transactions and £1 for telephone /non-secure e-commerce transactions. Prices paid by PaymentSense customers are not capped.
Credit card increase
Non qualifying transactions (telephone transactions without CVV2 and ecom transactions not using 3D Secure/Verified by Visa) now incur a charge of 0.5% above the qualifying rate. There has been no increase in interchange costs for non-qualiftying credit card transactions, so customers are paying an extra 0.5% in excess of interchange increases (which were nil).
Account on File Charge
A £3.99 per outlet per month fee is now paid annually in advance. So thats a new extra fee of £47.88 per year per outlet – if you have 5 shops then that would be £239.40 per year. There is no new services or functionality attached to this fee or any detail about why the fee is being levied.
An authorisation fee of 3.85p per transaction has been introduced. Some, but not all, other providers also charge an authorisation charge.
Capped rate guarantee
Customers will be very familiar with PaymentSense’s marketing message, their “Price Guarantee“ (opposite) that rates are “capped for the duration of your contract”. Contrary to what is promised, customer’s may feel aggrieved that the recent increases are clearly higher than the interchange increases as demonstrated above. They’ll also feel aggrieved with new charges being introduced – authorisation charges and account on file charges.
This message was until recently prominently displayed on PaymentSense’s website, is still featured by affiliates like PaymentSense Plymouth and is regularly used by the company’s sales people.
What does the PaymentSense merchant contract state with respect to their “Price Guarantee” ? Surprise, surprise it says nothing, so potentially the guarantee isn’t even contractual. However the PaymentSense website which displays their terms & conditions (click here) does include a reference to capped rates :
“Capped Rates applies only to personal credit and debit card rates for the duration of the contract; if acquirer personal card credit and debit rates increase during the contract period, then Paymentsense reserves the right to increase personal credit and debit card rates to cover those costs.”
You’ll note the terms & conditions are very different to the “Price Guarantee” in that they only cover personal cards and exclude business/corporate cards. Secondly they don’t mention interchange at all and instead refer to the acquirer rates which are the rates charged by to PaymentSense by its acquirer – First Data. We have demonstrated above that the Payment Guarantee promise is clearly broken but are the terms & conditions? We think it is unlikely that that these increases are reflective of the First Data increases without any additional margin from PaymentSense.
Any merchant not wishing to accept these fee increases should certainly challenge PaymentSense to demonstrate that neither the Price Guarantee nor their terms & conditions have been broken