A1. IC++ is a standard industry pricing framework that acquirers use to charge for payment processing services to merchants. It consists of the following fees:
IC stands for Interchange: This is a fee the acquirer (Secure Trading Financial Services (‘STFS’)) pays to the cardholder’s issuing bank (i.e. the bank that issued the card used to make the payment). The interchange rates are set by the Visa and MasterCard Schemes. STFS does not retain any part of the interchange fees as the full amount is passed through to the cardholder’s issuing bank.
First “+” stands for Card Scheme Fees: These are the fees STFS pay to the Visa and MasterCard Schemes. Visa and MasterCard set these fees at an industry wide level. As with Interchange STFS does not retain any part of scheme fees as the full amount is passed through to Visa and MasterCard. This Card Scheme Fee is the element which is changing and being highlighted in the letter sent to STFS merchants.
Second “+” stands for the acquirer fee: This is the fee STFS charges to cover its costs and margin for providing the merchant acquiring services. This fee is agreed between STFS and merchants and is detailed in the Pricing Schedule STFS entered with the merchant.
IC++ is the same as the Merchant Service Charge, different terminology referring to the same fees. Any fees and charges which a merchant must pay are set out in the STFS Merchant Acquiring Service T&Cs and accompanying Pricing Schedule.
A3. Both Visa and MasterCard are changing some of the fees they charge, and in some cases adding new fees. The impact of the changes is reflected in the table provided in the letter being sent to merchants.
A4. Scheme Fees are set by the Visa and MasterCard schemes and are reviewed periodically by the schemes, typically every year.
A5. As per the communication being sent to merchants, the changes are taking effect from 1st January 2017.
A6. STFS is not obliged to provide notice about such industry wide changes to scheme fees that STFS may pass directly through to merchants. However, STFS would like to provide greater transparency and are therefore communicating to merchants about this change.
A7. The impact will vary depending on each merchant’s volume profile, for example the mix of sales a merchant receives from domestic* versus international** transactions and e-Commerce versus MOTO transactions. Further to this, as Scheme Fees make up only a part of a merchant’s overall bill, the entire impact to each merchant will also depend on the level of each merchant’s “other fees”, for example wire fees and chargeback fees. STFS’s customer service team/sales team can provide a merchant with a guide as to the amount of impact a merchant may experience. Please note that providing such is a guide and indicative only.
* Domestic = sales to cardholders with cards issued by banks in the same country as the merchant.
**International = sales to cardholders with cards issued by banks in countries other than that of the merchant i.e. intra-Europe and interregional transactions.
A8. No, these pricing changes are industry wide with all acquirers within the Visa and MasterCard Europe regions being affected and hence changing their scheme “+” charges within their IC++ merchant pricing framework.
A9. The card schemes review their fees regularly and typically change their fees every 12-18 months, but it can be more or less often than that. Card Scheme pricing changes are a commercial decision for the Schemes. STFS has no control over the timing or magnitude of any such changes.
A10. IC++ comprises Interchange, Scheme Fees and the Acquirer Fee.
The Acquiring Fee will remain as set out in the Pricing Schedule agreed between a merchant and STFS.
Interchange is an element of IC++ which is set by the Card Schemes with consumer interchange within the European Union being regulated by the European Commission (i.e. the Interchange Fee Regulation). Therefore, for there to be a change in Interchange, either the Card Schemes would have to impose a change, or the European Commission impose regulation, to change the interchange fee rates.
In May 2015, the European Commission regulated that consumer interchange fees were to be capped at 0.2% for debit card transactions and 0.3% for credit card transactions across all EU markets. The Schemes have already changed their consumer interchange fees rates to comply with this.
A11. No, as this is an industry wide change. The change to your scheme fee “+” is permitted under the merchant’s current terms and conditions and Pricing Schedule with STFS.