Cross Border Acquiring rules brought in across the EU last year have led to a price war among acquirers, driving down transaction costs for merchants savvy enough to demand reductions from January 2015.
As cash treasury management expert Jack Large explains, the regulation undercuts existing MSCs by allowing cross-border acquirers that have regulated operations outside a country to bid for domestic merchants using the 0.2% and 0.3% interchange. As a result, many merchant acquirers have responded by setting up regulated operations outside their home country, sparking a price war.
For companies subject to high transaction fees, the potential rewards are significant. The payment and technology consultants PSE Consulting estimate that an organisation processing €15m of payments across Europe could stand to save over €72,000 per year in fees.
Of course, not everyone is thrilled by the increase in price competition. According to PSE Consulting: “the concessions have generated the most disruptive challenge Europe’s acquirers have ever addressed ” and that “high credit card interchange countries such as the UK, Germany, Portugal and Sweden are very vulnerable and are most threatened by major reductions in interchange revenues.”
According to Large, merchants have already begun asking their acquirers for substantial reductions, effective as of January next year.