Interchange fee regulation

Building an effective business strategy requires quick-thinking and flexible respond towards the situation. Merchants deal with this task everyday. One of the important issues to be carefully thought-out is operating costs.

In today’s modern world a lot of traders’ expenditures are connected with payments. As far as usually business is intended to conquer new markets, every wise entrepreneur should keep up with all regulations, that function on international market, in our case European one.

So let’s cut to the chase and look through several changes in regulations

Not long ago, specifically on the 9th of December 2015, EU regulations have already met some changes. Amendments concerned interchange rates for consumer cards were under discussion.

The decision was made to set a cap of 0,2% of the transaction fee for VISA and MasterCard consumer debit cards and 0,3% for credit cards as well.

However, it’s not all, that merchants should be aware of.

A while ago there were implemented four more remarks. Additional changes were required to come into effect, on the 9th of June 2016.

Do You want to know how these amendments will affect merchants business activity?

1. Card schemes have to develop their own activity apart from processing entities.

Although acquirers obtain an access to choose the card network to fulfill the transaction through, competition level would be still very low. In fact, this remark have to stimulate competition in order to reduce processing fees, charged to acquirers, which as a result would be passed in favor of merchants.

In a contrast, due to the lack of participants, this plan cannot be put into effect.

2. Payment methods diversity within a single card is available for both merchants and customers.

From merchants’ side this novelty may turn out to be useless. Owing to the fact, that by making a decision among various card schemes, traders often think at first about famous brand or transaction process convenience, regardless of technical suitability. In this case merchants choose not more simple and rational way of transactions flow, but more costly and tricky one.

So, in payment questions entrepreneurs should firstly focus on their benefits and than on consumers preferences, which are not unimportant though.

3. It will be mandatory for acquirers to offer an Interchange + pricing for merchants.

According to this regulations change traders will have chance to reach more savings. Nevertheless, there are some hidden traps.

Some cases claim, that several acquirers were caught lifting their rates while carrying out another pricing policy.

Besides, with Interchange + pricing traders may lose the simplicity of reconciliation. Furthermore, some acquirers are not able to meet all merchants’ requirements and provide the most proper pricing model for their business activity.

4. Finally, one more amendment concerns “Honor all cards rule” to lighten its leverage.

This signifies, that merchants can choose only one category from a card brand they want to accept. So, entrepreneurs can refuse brand’s card products, they consider to be expensive for them.

This is also the way merchants can get rid of compulsive commercial cards and surcharges as well.

Thus, there are some facts merchants should think over. The important thing to do, is to weight up all arisen opportunities and to develop own business strategy.