Transparency in interchange fees is a delicate topic. There can be 150 or so different charges merchants incur for accepting different cards, depending on whether it is a debit or credit card, a Visa of MasterCard card, or personal or business card. Now HSBC Merchant Services, a division of GlobalPayments, has begun detailing the various charges on the bills. Duygu Tavan reports
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HSBC Merchant Services has added a new feature to its merchant billing service. The former merchant acquiring arm of the banking group is now proving clients with a detailed list of up to 150-odd possible charges that they incur for accepting various cards and card schemes.
There has been pressure by the European regulators on Visa and MasterCard to provide more transparency for interchange charges and Chris Davies, the managing director of HSBC Merchant Services, says that this feature will enable its merchant to clearly see how much they get charged.
Although HSBC Merchant Services, now part of GlobalPayments, may not solve issues surrounding interchange fees on its own, Davies says, we can make [the charges] more transparent for merchants.
The level of interchange fee depends on the card scheme, whether it is a personal or corporate card or whether it is a face-to-face/in-store transaction or online transaction. There can be about 150 different levels of charges.
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Breaking down all interchange charges
HSBC Merchant Services provides clients with a breakdown of the different interchange fees they incurred. The merchant only sees the charges for cards they have accepted, not all possible charges.
The bill provides merchants with headline rate charges for all their transactions, as well as charges for terminal rentals, authorisation calls and other items.
On a separate page, the bill provides a daily breakdown of the total number of card transactions accepted and their value for a month.
On the same page, the merchant will also see any refunds or adjustments made.
In addition, there is a section titled Messages for potential changes in the billing format, such as in the terms and conditions.
This move to have given HSBC more transparency as well. Some merchants may marginally pay a bit more now, some others will pay less; and that is all because now they have the clarity of the different charges, Davies argues.
Smaller merchants may find keeping an overview difficult. It was not a case of opt in or opt out.
Some merchants prefer having just one price only, but we have a regulatory obligation to break down the different charges, Davies says.
What we are now considering doing is offering a simpler version of the detailed bill for smaller merchants. We will probably consolidate some of the charges into groups. And in the not-too-distant future, we are looking to migrate this service to the electronic billing service as well, he says.
As with any type of more transparency, there is the possibility that some merchants may opt to not accept particular cards, but, Davies points out, if they have a sticker saying they accept Visa or MasterCard, then under the Honour All Cards Rule, the merchant is required to accept all Visa and MasterCard cards.
Better focus on merchant services
Since its acquisition by GlobalPayments, HSBC Merchant Services, according to Davies, has become more attuned to clients. One of HSBC Merchant Services latest service is the introduction of a new transaction service to enhance card fraud protection levels.
The new service, called Global Fortress, was developed for merchants to comply with minimum security requirements set out under the Payment Card Industry Data Security Standard (PCI DSS) scheme.
At the launch of the service, Davies said: Although the process to ensure your business is PCI DSS compliant can be an arduous one, it is necessary to protect customers card data from fraud and protect the reputation of your business. Not only that, but a merchant may have to pay large fines if they decide to ignore these obligatory requirements.
Global Fortress allows our customers to manage both of these potentially substantial issues: a simple way of achieving PCI DSS compliance and a path to possibly avoid receiving industry fines when compliance is maintained.
HSBC will charge £6 per merchant ID per month for Global Fortress, which it promises will protect customer data and regularly test security systems through Qualified Security Assessor, SecurityMetrics.
