2015 Card Processing Price Changes – Review

 

For the last 12 months we’ve been highlighting the extensive changes happening in interchange regulation and how this would give rise to changes in the costs you pay to accept cards and great opportunities to save money by shopping around.  There has never been a better time to switch card processing suppliers and take advantage of the great deals on offer.  Remember, every supplier has applied the changes slightly differently creating cost saving opportunities.  Heres a review of the changes that have occurred and some tips as to where your business could benefit.

 

Debit cards

Visa-debit-card-and-credit-card-e1309541715531
Whats changed ?
  • EU legislation (effective on 9 December 2015) caps interchange at 0.2%.
  • Visa introduced its changes on 1 March 2015 setting interchange at 0.2% + 1p (secure) and 0.2% + 11p (non-secure) with caps of 50p/75p (consumer debit) and £1/£1.50 (business debit) per transaction, respectively
  • MasterCard will introduces its changes on 9 December 2015 pricing all debit at 0.2%, no caps.
What have acquirers done ?
  • All re-priced merchants between March and August 2015, mainly switching to a % of transaction value
  • Some merchants with high value transactions retained a fixed per transaction rate but above the cap rate
  • Few SME/small corporate merchants have been offered a cap
How could you benefit ?
  • If you process transactions above £245 then seek a rate cap – they do exist from certain suppliers
  • If your ATV is below £35, make sure you are re-priced by your acquirer as you should get a lower rate as your interchange costs are less
  • Look for acquirers offering a fixed rate margin.  The acquirer’s cost element (interchange) is variable at 0.2% but some acquirers will add their margin as a fixed rate per transaction rather than a percentage of transaction value so 0.2% + 7p rather than 0.39%.  Quite often this is cheaper but you need to do the arithmetic.

Credit Cards

Mastercard World
visa

 

Whats changed ?
  • EU legislation (effective on 9 December 2015) caps interchange at 0.3%.
  • Visa will reduce its interchange on 9 December 2015 to 0.3% – until then, no change (click here)
  • MasterCard reduced interchange on its premium consumer cards to match its standard consumer cards on 1 April 2015.  Cards reduced were its World, Signia and Rewards cards which were previously priced as premium cards (click here)
  • MasterCard reduced interchange on all card not present and eCommerce transactions to the same level as chip and pin transactions on 1 April 2015.
  • MasterCard reduced interchange on all consumer cards to 0.7% (was 0.8%) on 1 April 2015
  • MasterCard will further reduce interchange on 9 December 2015 to 0.3% (currently 0.7%) (click here)
What have acquirers done ?
  • Surprisingly little for SME’s / small corporates – the message has been very much that merchants will see lower prices “later in the year” whilst acquirers pocket the cost reductions which have happened so far.
  • Large merchants who are priced on “interchange plus” pricing get the benefits of lower interchange automatically
  • Some, but not many, “VIP” merchants received the benefits of lower interchange through tactical re-pricing to retain them
How could you benefit ?
  • Get interchange plus pricing – its transparent and all large merchants insist on it.  Most acquirers will not offer interchange plus pricing to smaller or even mid-sized merchants but shop around and you may find those that will.  The big benefit of Interchange plus pricing is you know with certainty that you will get the 9 December reductions in full and on 9 December.  Others will need to wait to see what their acquirers decide to do.
  • Demonstrate your knowledge – if you are being re-priced make sure your acquirer prices in interchange reductions to date.
  • Shop around – there has never been such a gulf in pricing between acquirers.  Switchers will get offered some or all of the interchange reductions to date, non-switchers will get little.

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