WorldPay has recently informed their customers of their latest price increase for merchant services. In their letter/email they advise that the “majority will see an increase in their costs of accepting Visa debit cards”. WorldPay has a market share of 40-45% which makes it the largest merchant services acquirer in the UK and visa debit is the mostly widely used card in the UK. This means is will affect nearly 50% of businesses in the UK. If you have already received your letter you can expect it in December, even if your a new customer or a customer of Handepay or Cardsave ( who up until have spared their customers some of the other WorldPay increases).
Its not all bad news. As this increase constitutes a material variation of your contract, WorldPay, handepay and Cardsave customers have 60 days from the date of the letter/email in which they can terminate their contract and find a new merchant services supplier at no termination cost.
How Much is My Price Increase?
This increase has been caused by Visa changing the way that that they charge Worldpay for “interchange” on debit cards from a fixed fee per transaction to a percentage of the transaction value. This change comes into effect on 1st March 2015. The change means that WorldPay’s costs have increased for transactions over £35 and decreased for transactions under £35. WorldPay have taken into account your average transaction value and your card mix so the price increase will vary from customer to customer.
Double Whammy
It was announced back in February that Cardsave wouldnow trade as WorldPay having been acquired by WorldPay in 2010. Cardsave had said that existing customers would no be affected by this change. However, the 75,000 customers of Cardsave will begin to be charged an annual fee fo £29.99 for SaferPayments PCI compliance in Novemeber/December.
Won’t other acquires just follow WorldPay?
As this is a universal change to every acquirer’s cost base, this could be possible. WorldPay is the only acquirer to announce an increase to date and other may take a different view on what if any increase are passed on and the timings of any increases.
There are other initiatives that the acquires are using to reduce merchant costs.
There will be an industry wide reduction in card processing costs in 2015, with the introduction of the EU cap on interchange rates. Because of this, some acquirers are considering not increasing their Visa debit charges.
Some acquirers are offering customer access to the Visa Cross Border Domestic Interchange Program from 1st January 2015. This program enables merchants to receive a 0.47% discount of Visa credit card rates and earlier access to the lower Visa debit card rates for transaction lower than £35. Worldpay’s letter makes no reference to this cost saving opportunity being promoted by other acquirers.
There is an emerging trend in the UK, which some acquirers are following, for Interchange plus pricing for mid-market merchants and SME’s, rather than the traditional blended pricing model. This has traditionally only been offered to the large corporate merchants.
How can we help?
As part of service to help businesses “improve profits by controlling costs”, with our partner Cardswitcher, we have access to “the only resource in the UK where you can get instant, transparent, comparable quotes from a range of suppliers for your merchant services.” If you would like to know more than please give us a call.