In the UK, the cost of accepting debit cards has always been a flat fee and that cost has slowly become cheaper over the years to the current levels of between 9p and 14p per transaction. However, all this changed on 1st March 2015.
Visa (who hold 98% of the UK debit card market) are changing their debit card acceptance costs to a percentage of transaction value, i.e. to the same basis as costs for accepting credit cards. This has considerable cost implications for some golf clubs.
Previously the Visa debit interchange rate was a flat rate of 8p per transaction irrespective of value, before your merchant services supplier added on its cost recovery charge. The new rate of interchange has now become 0.2% of the transaction value and 1p per transaction. This is good news for any transaction under £35 to £75 (depending on your current flat rate), at which level the interchange cost is now cheaper. However, for transactions above this the costs increase substantially until payments reach £245, at which point the increase is as much as 500%! The interchange cost is capped at 50p but some businesses may end up paying more as their merchant supplier adds further margins.
Transactions taken over the telephone that previously qualified for a lower charge if businesses took certain precautions, such as collecting the customer’s CV2 number may also incur additional charges. This is because all telephone payments will now be classed as non-secure, meaning that businesses that take payments this way may face additional charges.
If you’ve received a letter from your card processor about upcoming changes to your fees, it’s worth looking closely at how they’re passing on the changes to you and whether they’re doing so fairly. You will typically have a window of 60 days during which you can get out of the contract (though in some cases a termination fee may apply). You may be able to use this to negotiate better terms with your current provider or move to a provider who is offering a more competitive rate.
Other options to consider are:
- Shopping around for a new merchant supplier as prices can vary considerably
- Seek out capped rates for Visa debit
- If possible, take cards in a secure manner. For online transactions use Verified by Visa as this will not only reduce your Visa debit costs, but reduces interchange rates on other card types.
- Offer alternative payment options such as Paypal. Bank transfers can be free and there are numerous new mobile based options, aimed at making bank transfers faster and more convenient. For example, Zapp from Vocalink, PayM from the Payment Council and Pingit from Barclays.