Saturday 24 March 2018

Customers to suffer as shops pass on hike in card fees

Charlie Weston Personal Finance Editor

SHOPPERS will be hit with higher charges for using debit cards as banks replace Laser cards with new versions from Visa.

Retailers are being charged far more for the new system, and are poised to pass the extra costs on to their customers, likely in the form of higher prices.

Permanent TSB, Ulster Bank, Bank of Ireland and AIB are all in the process of replacing their Laser cards with new Visa cards.

The new cards will work the same way as the old ones -- people will be able to use them to withdraw money from an ATM and to pay for goods and services by swiping the card.

With both a Visa debit card and a Laser card, you can only spend what you have in your current account.

However, the Irish Independent has learned that the fees being charged to retailers for using the new Visa debit cards are up to 5,000pc higher than for Laser.

When you buy something with a Laser card, there is a fixed charge of 15c.

But the new Visa cards have charges imposed on retailers of up to 1.55pc per transaction.

On a €500 purchase, this will mean charges for the retailer of 15c for a Laser card, but €7.75 for the new Visa debit cards -- a rise of more than 5,000pc.

Retailers said yesterday it was inevitable these higher charges would end up being passed on to consumers in the form of higher prices if stores were to avoid laying off staff.

One card expert calculated that the higher charges would amount to additional fees of €24m a year for retailers, with these charges being passed on to customers.

Businessman Ronan O'Brien, who runs Molly's Pet Shop in Dun Laoghaire, Co Louth, and the nationwide Costume Shop chain, said the new charging structure was due to fees being imposed by merchant bank Elavon, one of the largest processors of card payments in the country.

He explained that Visa debit card transactions processed by US-owned Elavon were charged a percentage of the transactions.

Elavon's merchant service charge -- which covers transaction fees, terminal rental and administrative fees -- varies from 2pc for smaller retailers to 1.55pc for larger retailers.

"Retailers are only waking up to this because Visa cards are just being rolled out.

"The merchant-bank charge will either get passed on to consumers or jobs will lost," Mr O'Brien.


He is now trying to raise awareness about the issue among other retailers and encourage them to move to Ulster Bank Streamline or AIB Merchant Services, which have lower fees.

A spokesman for Visa said: "Visa Europe does not set retailer fees."

He said the fees were negotiated between retailers and the merchant bank without any involvement by Visa.

Elavon initially denied that it set the retailer fees, claiming they were set by Visa, but subsequently said it did not want to comment.

A spokeswoman for the Central Bank said banks were generally required to get its permission if they wanted to hike fees, but not in this case.

The Irish Payments Services Organisation, which runs the Laser scheme, said it would be taking up the new charging structure with the Central Bank.

Irish Independent

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