Card interchange charges - the proportion of the merchant service charge that is passed on to the card issuer - in the VISA and MasterCard card schemes has always been costly for the merchant, sometimes as much as 2%. The authorities and merchants around the world have been attacking this charge for years. The reaction of both card schemes has been to set strict rules and regulations for each type of payment card, for each acceptance channel, etc. This has produced more and more complexity, and now a leading consultancy in Europe, PSE Consulting who regularly carryout interchange cost optimisation studies for merchants and acquirers, have published a paper claiming that 'Interchange Complexity is Costing Europe's Cards Business Too Much!'.

PSE believe that in Europe, acquirers are paying (and by definition merchants because many now charge interchange + a service fee) a minimum of €30-60m/year unnecessarily due to the complexity of the Interchange schemes. They recommend:

• if you are a larger merchant and face regular repricing, then regularly ask your acquirer to explain how your interchange costs are calculated and recovered
• if you are an Interchange Plus (interchange + a fixed markup) merchant, then:
  • contract for regular external interchange audits
  • develop an internal skills base that understands interchange.
  • build basic MIS to trap the most common faults and highlight where not qualify for lowest rates.

Read more in the full paper here.

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Interchange complexity is only going to grow. Investing in some protection against Interchange overcharging could save your organisation €millions/US$millions.