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On 1 September card processing charges changed. The most significant change was for Debit Cards where fixed per transaction fees were abolished and replaced by percentage charges similar to credit card charges.
The changes have occurred because the EU Interchange Fee Regulation (IFR) has imposed a cap for fees charged by payment processing companies to card providers. These caps are 0.2% for debit cards and 0.3% for credit cards. Interchange fees are hidden from both consumers and businesses as they do not pay them directly. Businesses only pay them as part of their overall card processing fee.
The EU and UK governments believe the changes will save business in the UK £480million per annum. The impact will be particularly seen on low value debit card transactions where fixed fee charges can represent a high percentage of the payment and credit card transactions where fees should be reduced.
There are though some negatives, particularly, high value debit card transactions where the percentage fee will be higher than the fixed rate one. There is also concern that processing and card companies will exploit the situation and raise charges for their own benefit. The Government has committed to monitor the situation and the NFDA will also watch developments to ensure members are getting a fair deal.
Dealers should regularly review their card processing fees and now would seem timely with these changes. There are a number of providers, so we urge members to shop around for the best rates. The RMI has a card processing commercial service for members which can be accessed through our helpline 01788 538303.