European Interchange Fee Regulation (IFR), which came into force in early December 2015 and caps interchange fees on card transactions, stands to bring huge savings for many merchants. In fact, payments experts CMSpi calculates that merchants could save an average of 25% on existing credit and debit card transaction fees – amounting to £650 million a year for the UK retail industry. But this will only happen if payments companies pass on the savings in their entirety.
“Many merchants – particularly small-and-medium-sized businesses – are on a ‘blended’ pricing structure, which combines all the various components of a card transaction fee into one charge,” explains Brendan Doyle, CEO of CMSpi. “This blending structure makes it extremely difficult for merchants to identify if the savings are being passed on to them or not.”
Merchants should therefore seek advice and review their pricing structures in order to ensure the true extent of the vast savings possible from the IFR’s implementation reaches their pockets.