On 1st March 2022, many of Europe’s online retailers saw something new in their invoices.
The fees they’d been paying to process transactions were shifting; fixed costs became percentage rates, new line items appeared, and in some cases their optimal Strong Customer Authentication strategy no longer stacked up. In this article, CMSPI’s experts break down what happened, and what retailers can expect next.
The latest shake-up to online card transaction costs comes in the form of scheme fees, which the global card brands levy on every transaction processed via their rails. These fees are some of the most complex, differing by market, cardholder location, card type, payment channel, and more. March’s updates are even more challenging for merchants to reconcile, and they come alongside the host of fraud and authorisation challenges that online merchants battle every day.
To help in navigating the complexity of each change, CMSPI has outlined the top four questions every European payments manager needs to ask when approaching their latest invoice:
Impact Assessment for March Ecommerce Fee Changes
The SCA Effect
The last few years have seen merchants and suppliers alike scrambling to implement a Strong Customer Authentication strategy that complies with regulation without turning millions in good sales away. Using exemptions, integrating with low-friction payment methods, and minimising fraud has all had to be carefully balanced against the myriad costs in the online environment. In fact, today many merchants see new fees for every possible SCA approach they choose. The latest fee changes could transform that strategy all over again, making a merchants’ previously-optimal approach the more costly option. It is therefore crucial that every European merchant stress-tests their business case in light of the updates, quantifying what each scenario would mean for their costs, fraud levels, and transaction approval rates.
Why Retailers Need to Move Now
The latest changes to ecommerce payment fees are just a subset of those merchants will see throughout 2022. As these costs shift, effective mitigation strategies become even more crucial. Growing complexity means that many fees will not flow through correctly, leaving millions on the table for merchants who do not audit their invoices at the transactional level. Not only that, but the nature of the March changes makes an optimal SCA exemption strategy mission-critical; those who do not want to risk increasing costs and lost customers are acting now.