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Card payments could cost more for small retailers

Categories : Cash is efficient, Costs of cash versus costs of electronic payment instruments
December 28, 2016
Tags : Cost of transactions, Costs of payments, Efficiency, Electronic, Europe
The acquisition of Visa Europe by Visa Inc. could increase the cost of accepting cards for small merchants.
Guillaume Lepecq

According to French Newspaper Les Echos, the cost of accepting cards could increase for small retailers after 1 January 2017. In June 2016, European banks sold Visa Europe to Visa Inc. for €18.4 billion. “Ten days after the acquisition, Visa announced a 20% increase in the fees they charge acquiring banks (the banks of the merchants)”, recalled the Head of Payments of a French bank. As banks process all the transactions of their merchant customers, regardless of the type of card used by the consumer, they are bound to pass on these costs to the retailers.

Large merchants have a strong negotating edge as Visa and MasterCard will attempt to capture their business. Since 9 June, a European regulation gives consumers and merchants the right to choose which payment newtork will process their transaction when they use a card which is co-branded by both a domestic scheme and an international scheme. This is the case for 95% of cards issued in France, where domestic transactions were previously handled by the French scheme GIE Cartes Bancaires. The big international schemes are trying to win a share of these transactions by offering large merchants discounts.