It is throat-chocking to swallow the fact that regulators are advocating the reduction of merchant fees all over Europe only looked at interchange fees missing out on related processing fees.
Simply put, the European Commission’s decision to reduce credit card interchange (from 175 to 30 basis points) did not take into account the fact that acquirers and processors would carry on their tariffs.
Now, whistleblowers have publicized the matter, and U.K’s regulator for payment systems says it wants to investigate merchant fees and shed light on the dark issues behind interchange.
- The market watchdog, Payment Service Regulator, said it is planning an ‘Industry review into the delivery of card-acquiring services’ following complaints about the increasing costs of taking card payments to retailers.
- The IFR, however, did not give a limit to fees payable by merchants to card acquirers with the assumption that cut-throat competition between the industry acquirers would limit their freedom to raise fees. In reality, this has not been the case.
The payment supervisor is also liaising with other regulators across borders, and we expect these discussions to have global impacts. All Independent Sales Organizations (ISO) and Member Service Providers (MSP) who offer services to small merchants should watch out. Among the items, they’ll be investigating are chargeback fees, statement fees and the charges for enhanced services.”
Luckily for merchants and their dear customers, the fees may go down soon.
PSR’s review will narrow down to the following:
- Acquirers not sharing with merchants the savings made IFR’s limit on interchange fees.
- The barriers that block merchants from comparing card acquirers and making a switch.
- Hindrances to the services that can help retailers “compare and switch acquirers.”
- The ambiguity around the charges merchants pays to take card payments.
- Scheme fees; the charges card-scheme operators press on acquirers and their rules of operation, which the watchdog has noted: “favors the more established acquirers.”
- An increase in the percentage of scheme-fee merchants pays to their acquirers.
It is understandable that the regulator sheds light on cost accounting as clients have complained through Worldpay customer service number because firms like Square still charge a 1.75 percent for payments made in person or 2.7 percent for transactions made online. Such companies will finally go through the test in the UK and hopefully these painful rates will be lowered.
Author Bio: Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. Through the worldpay customer service number, he has helped thousands of business owners save money and time.