Retailer Boycott over Visa Card Costs.
AN increasing amount of retailers are declining to process consumer credit card payments under certain amounts, Retail News can reveal. The reported costs in processing Visa debit cards, which are replacing Laser cards, are forcing retailers to decline card payments under €10 and often €20.
Tara Buckley, Director General of RGDATA, told Retail News the situation is ironic, since the government wants a cashfree society and banks argue that taking the cash out of a business’ equation will reduce costs. “I was recently in a restaurant run by the state,” she told Retail News. “There were signs all over the place, saying ‘No Laser or Credit cards today’. I gather, from other people who have been at cafes and places run by state bodies, a lot of them are not taking cards. If they’re trying to push people to stop using cash, they’re making the absolute wrong decision in allowing merchant banks and providers to get away with this type of fee structure.”
Vincent Jennings, Chief Executive of the Convenience Stores & Newsagents Association (CSNA), said he sympathised with retailers who put a minimum cap on credit card purchases. “It depends on what kind of deal they have with the bank, but as far as I’m concerned it’s legitimate. Retailers are not fools: they know what their customers will and will not accept. Someone asking for a low value product, such as a lottery ticket or packet of cigarettes: if that costs the retailer money, the transaction doesn’t make sense.” The Visa debit card introduced a new set of charges, higher than Laser fees, argue RGDATA. Retailers traditionally paid a fixed charge per transaction; now, many are paying a percentage of their transaction. In some cases, this has raised the retailer’s cost of using the card to over 5000%.
Una Dillon, Head of Card Services at the Irish Payment Services Organisation (IPSO), conceded this might be the case. “In terms of the merchant service charge, I have heard anecdotally that some acquiring processors are charging a percentage for debit card fees. If I was a retailer, I would be questioning that.” However, Dillon said Laser and Visa interchange fees are similar: the interchange fees for Visa are around 5c for transactions under €15, and 10c for transactions over that amount. Acquirers appear to be charging higher fees for transactions, she said. IPSO’s recommendation? Retailers should shop around the five acquiring banks operating within Ireland: Elavon, AIB Merchant Services, WorldPay, Barclaycard, and HSBC. “They can shop around not just in Ireland but elsewhere,” added Dillon. “There’s no reason to stay with the same acquirers they have always been with. The pricing will be different, depending on the card acquirer.” No one appears to accept responsibility for the added fees. Domestic banks claim that Visa is imposing the new fee structure. Card issuers claim the processors are at fault. Other countries, including the US, have introduced regulations in terms of how much the banks can charge. “The law stepped in,” explained Jennings. “Under a federal bill, there is a cap on the money the debit card providers can charge to retail. These things were running at an astronomical level. Now they are being charged on a unitary cost.” IPSO advised retailers not to put a minimum cap on credit card payments, saying to do so contravenes card acceptance rules, terms and conditions. “In the future, there’s an incentive for retailers to accept contactless cards [new debit card technology] for low value payments,” concluded Dillon. “There’s a reduced interchange on those transactions.”
