Card processing in Australia just got cheaper
This Act addresses concerns across industries that New Zealand’s merchant service fees were higher than Australia and the UK. This new regulation will introduce caps to Interchange fees to help reduce merchant service fees on credit and debit card transactions.
Depending on how the payment is being made, different caps on the fees apply.
That’s all great news, but read on if you’re unsure of what Interchange fees are.
Each time a consumer makes a payment via a credit or debit card, the acquirer pays the cardholder’s bank an Interchange fee, set by card schemes like Mastercard or Visa. Businesses then pay the Interchange fee back as part of the card processing fees.
Traditionally, there’s been little to no insight into how these fees were calculated and adjusted. However, with a push by governments worldwide, like in Australia and across Europe, to regulate and standardize Interchange fees, there’s been an overall increase in transparency.
Ah, the age old question. Many factors come into play but here are some examples.
Transactions are generally lower if processed locally. This is why it’s better (and cheaper) to use an acquirer based in New Zealand to enjoy the best rates.
2. Type of card
Credit cards tend to have higher Interchange fees compared to debit and prepaid cards as the level of risk is considered to be higher.
3. Type of transactions
Card-present (CP) transactions at physical stores tend to have lower Interchange fees than card-not-present transactions. This is because the risk of fraud is lower when your customer’s card is physically present.
Some of these factors can be influenced to streamline your payments processes and cut costs, but some of them are outside of your control.
The calculation of different payment card costs, including Interchange fees, can be tricky. That’s where Interchange++, our preferred pricing model, comes in. We can help you track changes to the Interchange fees rates, passing on the savings directly to you.
Other pricing models, like blended pricing, may not pass on these cost savings to you.
Additionally, we will also show you a detailed breakdown of each payment card cost, so you’ll know exactly what you’re paying for. No hidden costs or surcharges.
*Cap is not applicable to commercial credit cards.
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