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Interchange rates are down – that’s good right?

You may well have heard the chatter about the EU’s intervention into the credit card market, following their conclusion that Visa and Mastercard were in violation of European antitrust laws and were abusing their position by setting the interchange rate (the percentage paid by banks to them for handling the transaction) artificially high. From 9th December 2015 the new EU regulations will cap interchange rates at 0.2% for debit card transactions and 0.3% for credit cards.

So what does this mean for independent merchants like yourself? Well, in theory, this will mean a saving of 1p versus current rates.

“Why only in theory?” I hear you ask. While the EU regulation capped the interchange rate, it did not touch the other players in the chain – the processors and acquirers – who are still free to set their rates as they see fit. This means they are under no obligation to pass the savings on to the end merchant and can keep the benefits for themselves.

Would they do such a thing? I think we all know the answer to that. Independent Merchant Services is aware of at least one bank that, not only didn’t pass on the savings, actually, under the guise of “simplification”, increased fees for its merchants. The guilty party is now charging up to 1.8% on consumer credit cards and contactless payments, a scandalous mark-up when you consider the new interchange rates.

So how do you navigate this minefield? This is where Independent Merchant Services can help. Simply call us up or fill in our contact form and we will take you through the deals available in the market, separating the rip-off merchants from the good guys, and work out what the best solution is for you.

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