Higher card processing fee affects retailers’ bottom line

According to some retailers, Visa interchange fees have jumped by as much as 130% during the past year



4 October 2023

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Some retailers have seen the costs they incur for using credit and debit card systems rising by as much as hundreds of thousands of euros during the past year.

However, the Irish Independent reports Visa has defended the rise in the cost of the ‘interchange fees’ which retail merchants pay to the company, stating that the funds are used by banks to improve their operational systems and services offered to business customers.

According to some retailers, interchange fees have jumped by as much as 130% during the past year.

Visa states that when a customer uses their Visa card to purchase something, four parties are involved. Namely, the buyer, the buyer’s bank, the retailer and the retailer’s bank. For each of these transactions, an interchange fee is paid by the retailer’s bank to the cardholder’s issuing bank.

The retailer then repays the interchange fee back to their bank as part of its wider processing fees. Visa stated that it doesn’t retain any of this fee, and that it goes to the providers of merchant services. In Ireland, these are AIB Merchant Services, Elavon, Bank of Ireland Payment Acceptance, Worldpay and Barclaycard.

Visa insisted that the interchange fee received by the providers helps them to maintain and improve their payments systems.

“We review our fees regularly to ensure they are competitive and in Ireland they are some of the lowest globally,” a Visa spokesperson said. “Interchange fees enable banks to issue cards, innovate and invest in new technologies and experiences that benefit businesses – in particular small businesses – and protect them against fraud. These efforts are critical to drive commerce.”

Importantly, the interchange fee that consumers can be charged is capped under EU law, but the interchange fee businesses can be charged isn’t.

The Irish Independent reports that while Visa doesn’t receive any of the interchange fee, the company is responsible for setting it. The firm liaised with the five payment providers here last year to determine what that fee would be, and insisted it bases the decision on the requirements of both merchants and providers.

Visa added that a Merchant Performance Programme introduced earlier this year can help eligible businesses defray interchange costs and keep them tailored at a level similar to those for consumers.

“Businesses should contact their payments provider directly to discuss [this] further,” the Visa spokesperson added.



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