Credit Card Processing - The True Fee
The prices for small business owners are enormous when it comes to card processing. Card processing is in urgent need of a big change in the way merchant premiums are charged. What exactly are the card processing services that small companies pay for, and are they paying too much money?
Card processing fees
The British Retail Consortium (BRC) has engineered a quite comprehensive report based on the charges of card processing in 2009. Their results are interesting and tell us that from the primary payment methods available to the public: cash, cheque, fee cards, debit cards, cash, and last but not least credit cards, it’s this last one, the credit card that is liable for the greater amount of the expense of payment collection.
Out of ?588.4m in 2009, 47.2% of this was paid to be able for suppliers to collect payments from credit card buys, at an average of at 33 pence per purchase. That is costing the business enterprise operator 33 p for each transaction to obtain their money. So where does this cash get spent? We really don’t think that the banks are quite enthusiastic to give up this detail, but we do think that there preferences to be a sizeable change.
The largest price connected with card processing is the merchant service charge, and this accounts for 81.2% of the deal fee. The rest is paid for such things as: fraud, cash in transit, bank charges and cheque guarantor. The merchant support fee covers such things as: processing premiums, card issuers’ interchange service fees, and card scheme prices.
What can be done to reduce card processing fees?
The BRC recommends that the card processing prices really should be billed on a pence per exchange groundwork much like cash, and certainly more in line with its 2.1p fee per deal. But in order for the BRC’s recommendations to be carried out, credit card processing service fees will need to be reduced together with bank costs in order to make things fairer for the small business enterprise proprietor who is likely to get hit the hardest of all by the merchant services charge.
Cash remains one of the most common sort of payment in the UK and stores can handle the merchant fees associated with this simply because they are reasonable. Having said that, if cash is to lose its strength as some people would say, then without doubt debit card and credit card purchases are likely to amount to a significantly greater percentage of sales in the near future. At present cash represents 52% of sales in 2009, but it was 60% in 2007; so there’s undoubtedly a sluggish decline in its take advantage of. At the other end of the scale credit and debit card transactions are undoubtedly on the rise; not fast, but certainly mounting.
If this is in fact what organisations like The Payments Council want to see happen, then the BRC really needs to be taken very seriously and card processing fees must fall into line to be able to make the transformation a lot easier and much less damaging to small businesses and those who find credit card processing a draw on their resources.
To discover more about the true charge of Credit Card Processing and to read more articles on in the UK, visit Card Processing UK today!
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