6 ms·

In the European Union the fee a bank can charge the merchant for a transaction is now capped to 0.3% (https://www.gov.uk/government/news/credit-and-debit-card-f

• tehwebguy 10y ago
  One big item: The rate you are describing is just interchange, it went from an average of 0.9% to a cap of 0.3% in the UK. Merchants are not just paying 0.2% to 0.3% on DC/CC transactions.
  • germanier 10y ago
    To put this into context: Most (small) German merchants could pay less than 1% in total fees for credit/debit card transactions if they were switching their acquirer. Large chains pay less than half of that from everything that is publicly known. For German debit cards (Girocard) the large merchants pay a total fee of 0.15% which is probably much cheaper than cash handling.
    • skrause 10y ago
      And maybe that's a season why we haven't seen Apple Pay in Germany so far. In the USA Apple gets 0.15% of each transaction, but that would be pretty difficult in Germany if 0.15% is already the total transaction fee.
      • thesimon 10y ago
        UK has the same interchange rates and they have Apple Pay. The German banks are just too greedy and invested in their own shitty Girocard scheme which doesn't even support tokenization which would be required for Apple Pay.
        • germanier 10y ago
          Girocard is cheaper than anything that could be used in the UK. I don't know the UK situation in detail but I would be surprised if there are merchants paying less than 0.3% for some transactions which already is double of what the large German stores do.
          • thesimon 10y ago
            The interchange which is what the bank gets and which they use to pay Apple. For Maestro/MasterCard Debit/VPay/Visa Debit that's 0.2% in the whole EU (UK & DE included). The girocard scheme negotiates the fees with the merchants and it's around 0.15% - 0.2%. At least for the banks, it's not a big difference.
• Svip 10y ago
  In Denmark, we've had a special national card since the 1980s, called 'Dankort'. The fee for any transaction is 0.50 DKK, regardless of the transaction's size. This means that Dankort is almost always cheaper to use than Visa or Mastercard. As such, almost every store in Denmark accepts Dankort. But - like every other place - they are not allowed to pass that charge onto consumers directly. So it mostly happens indirectly, i.e. the prices in the stores. It is important to note, that until a few years ago, there was no transaction fee on Dankort transactions. It was practically a public subsidised credit card system. And it worked great. Now the EU is requiring that bundled cards get a choice. You see, one disadvantage of the Dankort was that it only worked in Denmark. So they made a deal with Visa to make a bundled card, called 'Visa/Dankort'. In Denmark, it would use the Dankort part and abroad it would use the Visa part. But now consumers are required to make a choice for each transaction whether they want to use the Visa or Dankort part. It might seem great that you get a choice, but there is really no reason to pick the Visa part in Denmark. But since stores aren't allowed to pass the costs directly onto the consumers who pick Visa, prices are likely to go up, even if just 1% of every transaction is suddenly a Visa transaction. I assume these rules are part of the capping of fees in the rest of the EU, and many Danish observers also suggest that these rules probably work great in the rest of the EU, just not that beneficial in Denmark.
  • germanier 10y ago
    Are you sure they are not allowed to pass on the cost? In that case almost every store was violating that half a year ago when I took this photo: http://i.imgur.com/MA7VqnL.jpg http://i.imgur.com/MA7VqnL.jpg Anyway, the same regulation that introduced the application choice also stopped the schemes from prohibiting surcharges.
    • Symbiote 10y ago
      I don't know any better than you, but I have been charged for using Dankort a few times, mostly online, and charged more when I used a foreign credit card in supermarkets. Ticketmaster charge 0.66kr, for example: http://www.ticketmaster.dk/help/gebyrer.html?language=en-us http://www.ticketmaster.dk/help/gebyrer.html?language=en-us
• morgante 10y ago
  I don't think the 0.3% is the full cost, I believe it's just the interchange fee (ie. what goes to your merchant bank, not the credit card networks or issuer). > Compared to that the 2-3% fees in the USA really seem to be very high as well. Keep in mind that US credit cards offer 2% cash back, so the system isn't actually handing a bunch of money to middlemen.
  • cookiecaper 10y ago
    Some credit cards offer some cash back (usually 1% on most transactions, 2-6% on specific types of transactions). If you don't have a cash back card (e.g., you're using a debit card that is processed by VISA, or you're using one of the many non-cash-back credit cards), the card company keeps the entire fee.
    • ericabiz 10y ago
      > the card company keeps the entire fee Not exactly--there are companies taking a bite out of the fees all the way down. I run two retail stores, and after initially using Square (which charges a 2.75% flat fee), we switched to a merchant processor that uses what's called "interchange plus"--where they just charge us the interchange rate plus a small additional fee. Chase Visa debit cards are the #1 card we process, and our fee went from 2.75% with Square to 0.05%. Yes, you read that right! That is on a signature process, not a PIN. We do have to pay a monthly fee now, but the savings is ridiculous--some $500+/month over Square's rates. That $500/mo was Square's profit margin, basically. Our numbers showed that at about $5K-$8K/month in transactions, interchange plus processors will start to beat Square, and by the time you're doing $10K-$15K/mo in sales, it really starts to add up.
      • mthoms 10y ago
        That makes sense. Square's niche is businesses that are too small to bother getting real merchant accounts. The convenience of not having to go through that process is what you're paying for. After a certain level of sales, it's certainly logical to "go direct" with a merchant account and eliminate Square's cut.
• petercooper 10y ago
  The bank may be limited in charging the fee but companies aren't. Credit card surcharges are quite popular in the UK. I notice them most on airfares as they tend to be quite expensive - Virgin Atlantic charges 1.5% surcharge for credit cards, for instance.
  • Symbiote 10y ago
    Airlines are almost the only place you will see these charges in the UK. I've used credit cards for almost all purchases for many years, and the only other place a surcharge is likely is a tiny, struggling business, like a convenience store or a rural pub.
    • petercooper 10y ago
      Quite a few car insurers as well (Aviva comes to mind). But yeah, I live in a rural area, so it's not uncommon for things like travel agents, independent hardware stores, etc, to have surcharges. I am not aware of any chain stores doing it, so it's probably unusual in more cosmopolitan areas.
    • zimbatm 10y ago
      Also corner shops all add a 50p charge if you buy for less than 10GBP or if you buy cigarettes.