One of the fees retailers face for accepting debit and credit cards is being halved from today (9th December), following the announcement by the Minister for Finance in the Budget 2016 speech. From today, the so-called interchange fees banks charge retailers for accepting debit and credit cards will be capped, resulting in significant savings in fees for retailers.
Commenting on the reduced fees, Minister for Finance Michael Noonan stated:
“An increasing number of people are choosing to pay by debit card – the rate of usage has more than quadrupled in less than a decade, and is still growing strongly. The reduction in fees will significantly reduce the cost to ordinary retailers of accepting card payments. However retailers must shop-around and make sure that they are getting the best possible deal from their card-machine provider if they are going to get the full benefits of this reform.”
Interchange fees are charged by a card holder's bank to a retailer for both debit and credit card transactions. Interchange is not a fee which impacts consumers directly, though it might affect consumers indirectly through higher prices and a lower willingness by retailers such as newsagents or hotels to accept card payments.
A maximum fee limit is now being set on interchange for both debit and credit cards. For debit cards, the maximum for domestic debit card transactions is to be set at a weighted average of 0.10% of the transaction value, half the current level. The maximum for domestic credit card transactions is to be set at 0.30% in line with the Interchange Fee Regulation. Combined, these measures will save retailers in excess of €36m a year. Both of these limits will come into force today (9th December)”.
According to Minister Noonan:
“Ireland has now got among the lowest rates of debit card interchange in Europe following this reform, which will help to make Ireland one of the most card-friendly countries in Europe. We now want to see consumers benefit from these changes, if they choose debit cards as their preferred method of payment. We are all familiar with outlets who will not accept card payments under €10 or in some cases €5. In response to the benefits I announced on Budget Day, I am now calling on retailers to remove this minimum spend. Furthermore, retailers should be aware that most shoppers have a contactless card in their wallets which can be used for transactions up to €30. It is cheaper and faster than any other way to pay, both for the retailer and the consumer. These changes are designed to facilitate card payments, they do not disadvantage any customer who prefers to use cash or other payment methods.”
Ends