The End of Maestro Could Signal Cost Increases for European Merchants

Will it affect my payments costs?

There are three potential avenues through which the switch to Mastercard Debit could affect merchant costs.

1 – Scheme fee differentials

Via their acquirers, merchants pay scheme fees to the global card brands to accept each payment sent via their networks. The scheme fees for Mastercard Debit transactions can be higher than those for Maestro, signaling an increase in costs as the new cards roll out.

“With one of our merchants, for every €1 billion in sales, we’re expecting the shift to increase acceptance costs by €1 million,” said Ben Scourfield, European Analyst Lead at CMSPI. “That’s only in one of their markets, and it’ll only grow with inflation, so we’re encouraging merchants to get into their payments data well in advance or risk significantly underestimating their European payments budgets.”

2 – Knowing debit when you see it

In some countries, there have been reports of terminals failing to recognise Mastercard Debit transactions as exactly that – debit – and instead treating them as credit transactions.³ As both interchange and scheme fees are typically higher for credit payments, similar errors could bring merchants’ costs above regulated debit rates.

3 – Expanding Acceptance

We know that with Mastercard Debit cards comes greater online availability. But we also know that the average card acceptance fee online is higher than in-store and, in markets where low-cost alternatives dominate the online space, the potential for cannibalisation of this volume could affect merchants’ long-term digital acceptance strategies.

In Focus: The Netherlands

The Netherlands provides a key example of the potential impact of Maestro discontinuance for merchants. When the market’s domestic PIN network was discontinued in 2012, it was Maestro which largely took over and has remained dominant ever since.⁴ In fact, debit cards constituted 88% of card transaction value in 2020, and Mastercard made up 92% of the country’s total card expenditure.⁵ Shoppers in the Netherlands are not set to lose only Maestro, but also VPay (Visa’s equivalent debit brand).⁶ Currently, both Visa Debit and Mastercard Debit attract higher scheme fees than VPay and Maestro respectively, signaling cost increases for those receiving pass-through pricing. But that’s not the only concern. Popular domestic payment method iDeal, which made up 70% of online commerce purchases in H1 2021⁷ and is often a cost-competitive option for merchants, may see its influence wane as debit card availability grows online.

What should I do next?

The end of Maestro will affect every merchant’s costs differently. In some markets, for example, Mastercard Debit and Maestro transactions currently attract the same scheme fees, mitigating the impact for retailers with volumes concentrated in those regions. We have also observed discrepancies in the planned application of fees depending on a merchant’s acquirer, but with pass-through errors commonplace, even merchants on the same pricing could be subject to huge discrepancies as new fees are applied.

With this in mind, there are three key steps for businesses to take:

1. Know your current state – Merchants need to dig into their payments data to understand their unique card scheme mix by market and then, with scheme fee application differing by ATV, capture method and more, use BIN-level data to determine the relevant fee differentials.
2. Stay in tune – Optimization isn’t one-and-done. Ongoing monitoring is necessary to ensure that payments mix trends match expectations – be that due to hardware capabilities, or increased online competition.
3. Communicate early – Determine your acquirer’s approach, and utilise data-driven benchmarking to ensure that you aren’t left paying more than your competitors once Maestro is taken off the table.