Merchants set to suffer as Visa announces increases to scheme fees

12th September 2017
Contributor:
Callum Godwin
Callum Godwin

Following the recent communication from Visa on its plan to increase scheme fees (the fees acquirers pay to Visa) from April 2018, CMSPI is now able to provide greater insight into the significant impact merchants are likely to encounter in the coming year.

The changes stand to increase Visa’s revenues by at least €100 million in fees that will be passed from acquirers directly to European merchants.

CMSPI has assisted merchants in the US for many years to mitigate the impact of such changes and will use this experience to assist European merchants in any way possible.

Areas affected

  • Per item increases – increases have been announced to the pence per item fee across all regions (domestic, European cross-border and international transactions), with lower ATV merchants to be hit the hardest (please see graph below)
  • Removal of tiered pricing – tiers that give discounts to larger acquirers are to be removed. Such changes may make it easier for small acquirers to compete, but equate to significant increases overall particularly for large acquirers
  • New fees – an acquirer authorisation fee is being introduced. Merchants processing a higher proportion of Authorisations to Settlements will be particularly affected.
  • Cross border – the currently consistent domestic and intra-regional (EEA) pricing will be replaced with an additional premium for intra-regional transactions.

The increases are announced following the acquisition of Visa Europe by Visa Inc. last year as Visa attempts to align its fee model in Europe to that which it applies in the US.

We believe there is an opportunity to expand yields in Europe … from the perspective of a commercial enterprise rather than a member-owned association.

– Charles W. Scharf, CEO, Visa Inc.

Next steps

These are not the first increases since Visa Inc.’s takeover and follow significant increases earlier this year. CMSPI has seen these new fees directly passed onto merchants in an inconsistent fashion.

CMSPI is bringing the increases planned for April 2018 to the attention of the PSR, the Treasury Select Committee and other regulatory bodies and will continue to fight against unjustified price increases.

CMSPI has been working with merchants to mitigate any rises, and achieved substantial annual savings. To understand the extent to which you will be affected and how CMSPI can assist with substainably mitigating the announced increases, please speak to a member of our team.

Need help mitigating scheme fees increases?