By Charlotte Dennis-Jones
Card schemes stand accused of trying to compensate for the expected loss of the controversial interchange fee by hiking other fees they charge to retailers.
The British Retail Consortium has sent a letter to its members, seen by Retail Week, which warns retailers to be vigilant for “significant rises in card acquiring fees”.
The warning comes just weeks after the European Commission ruled against interchange fees levied by MasterCard on cross-border transactions. The ruling is expected to set a precedent for the abolition of all interchange fees levied by the card schemes, which they claim pay for the cost of processing transactions.
The BRC letter – from director-general Kevin Hawkins – says that in what it describes as “a worrying new development, the card schemes seem to be trying to get their retaliation in first”. The BRC claims that some members have been hit with unexplained rises in card acquiring fees already and that the card schemes are reducing services to card holders.
Both major card schemes – Visa and MasterCard – strongly denied that they are increasing fees or reducing services. A Visa spokesman said: “Visa Europe has not increased its fees to its European member banks, nor have we reduced services to card holders.”
Peter Robinson, DSGi commercial manager for payments and chair of the BRC’s Payments Working Group, said many would view the card schemes’ approach as a “tactic to increase those fees that are outside people’s radar”, amid discussions about the Multilateral Interchange Fee (MIF). It would, he added, be one way to boost revenues ahead of the likely abolition of the MIF.
Alisdair Gray, director of the BRC for Europe, said: “It’s possible that retailers might find their fees are going up and won’t question it.” He added it was vital that retailers notify the Office of Fair Trading and the BRC if they are hit with higher charges.
The total Merchant Service Charge – the amount paid by a retailer to its acquiring bank – comprises the MIF and a card acquirer fee. In most cases, the MIF forms the vast proportion of the total charge – as much as 98 per cent.