CSNA engages with Central Bank regarding Merchant Processing Charges (MSC),

Association highlights the much steeper i-charge applied to certain commercial credit cards, compared to consumer debit cards



9 March 2023

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The Convenience Stores and Newsagents Association (CSNA) is advising retailers to watch their Merchant Processing Charge (MSC), to ensure they are not overpaying for this.

There are three elements of the processing charge per transaction, the CSNA outlines. These are interchange, scheme fees, and the merchant service charge, all of which are included on your banking statement.

Interchange is a fee charged for each transaction by the card issuing bank (the card holders’ bank). Interchange pricing can differ based upon geographic region, card type and transaction type. It ordinarily is described in your statement as “i-change”.

This means that the calculation of fees for processing what is essentially the same service for four different customers all purchasing the same product will result in significantly different charges to the retailer accepting these cards.

Whilst the majority of retailers will be aware that, generally speaking, debit cards are less costly to process than credit cards, what they may not be aware of is that a corporate or business card, whether debit or credit, is substantially more expensive to accept than the consumer card that is ordinarily used by individuals.

While some merchants may pitch themselves towards corporate or company business and may be happy to pay significantly more to obtain larger-than-average sales of airline tickets, luxury gifts or hotel suites, for those of us in the retail of grocery, fuel and news, the CSNA believes that the imposition of fees that not only outweigh, but can actually obliterate the profit earned from a sale, is sufficient cause for concern.

A recent statement from AIB Merchant Services was shown to the CSNA offices by a member who was very concerned regarding how relatively expensive his “corporate” customers were, when compared to those described as the “consumer” customers.

His statement showed that he had accepted 2,795 consumer debit cards, a further 146 prepaid cards (which are considered to be debit cards), and 97 credit cards

Of these cards, 72 (2.4% of the total) were classed as ‘commercial’ rather than ‘consumer’ and attracted i-change rates of €137.23 out of the total i-change fees charged of €215.66, or 64%.

The i-change charged for the largest category accepted was for the 2,502 Visa Debit card users, it amounted to €59.91, and translated as 2.39 cent per transaction.

Contrast that with the €81.75 paid for the i-change for the 13 commercial credit cards used, or the €55.48 i-change fee incurred for the 59 commercial debit card transactions. In those instances, the retailer incurred per transaction fees of €6.29 and €0.94 cent respectively.

According to the CSNA, the central question here is: Can a retailer identify these cards in advance of a transaction being processed and if so, are they entitled to seek an alternative style of payment, e.g., a consumer credit or debit card, or cash? The answer is yes, they can, but identifying can be difficult as not all cards are easy to pick out as more costly types, particularly in the era of contactless payments and even more so, cards that are stored in a phone wallet.

The CSNA has engaged with Central Bank on this matter and will also commence a series of meetings with the other stakeholders in this space.

The association says it is of the view that certain styles of cards should have the ability to be either barred from usage in certain terminals at the request of the merchant- similar to the inability of bookmakers to process credit cards, or be the subject of an audible alert, allowing the merchant to choose whether they wished to proceed with the transaction.

The recent changes in the Budget providing for a greater level of staff bonus led to a significant (greater than 70% according to ME 2 You sources) increase in purchases of these products but as the commission level is a flat fee, it is very likely that the sale would result in a loss if paid for with a corporate card.

Some outlets may elect to take such charges “on the chin” as a business expense but many others cannot afford to do so!




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