It is no secret that smaller businesses are struggling to keep with growing overhead costs these days. Especially when it comes to accepting payments, the fees can add up to very large amounts rather quickly. A new initiative in Europe aims to lower these transaction fees by up to 1.500 EUR per year. That is, assuming card processors will give retailers the discounted rate in full, and not shave off a small cut every time.
Also read: Central Bank of Kenya Warns About Bitcoin In Paid Newspaper Advert
Lowering The Interchange Fees For Small Businesses
Any business dealing with card payments will know about Interchange Fees, which are added on top of every transaction paid for with a plastic card. This fee is paid to the card processor, which, in most cases, is one or more banks settling the debt between card user and retailer. In most cases, these fees are anywhere between 1% and 3.5% per transaction, and numbers can add up quickly.
A new European initiative wants to create an artificial ceiling on Interchange Fees, and the biggest effect will be on transactions paid for with Visa or MasterCard. In Belgium, each credit card transaction was subject to a 1.45% fee, which will now be lowered to 0.85%. This reduced processing fee has to be enforced by card payment processors such as Worldline.
However, there is a growing concern regarding card payment processors not offering reduced Interchange Fees to retailers in full. The Belgian government is tasked with the responsibility of ensuring these lower fees are enforced and respected by everybody involved in the process. Also, these lowered fees will have to be applied to both online and mobile payments as well.
Looking at things from a per-transaction perspective, these reduced Interchange Fees will not be a huge deal. That being said, when looking at the gross amount of funds changing hands through card transactions on a yearly basis, fees will be reduced by nearly 110 million EUR per annum. Do keep in mind this number is for both debit and credit cards combined.
The biggest issue consumers are worried about is how certain retailers are charging their customers extra when dealing with card transactions. Even though the number of retailers doing this is fairly low, the European Union will decide whether or not this business practice will be outlawed or not in the future.
Bitcoin Transactions Are A Far Cheaper Alternative
Unlike card transactions, Bitcoin payments are subject to very low fees in general. To be more precise, there is a minor transaction fee associated with every transfer of funds, as well as an exchange fee when converting Bitcoin to fiat currency. Depending on which Bitcoin payment processor one uses, this fee can be anywhere from 0% to 1% per conversion.
Overall, Bitcoin payments are far cheaper for any merchants, especially because there is no need to invest in additional infrastructure such as payment terminals. Furthermore, Bitcoin payments all businesses to sell goods and services to international customers, without having to worry about exchange rates.
What are your thoughts on the fees associated with card transactions? Do you know of any retailers accepting Bitcoin payments in your area? Let us know in the comments below!
Source: Unizo (Dutch)
Images courtesy of Shutterstock, Worldline
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