Changes from Laser to Debit – Increase Fee’s 5,100%

It seems in the recession businesses are being squeezed for every drop they can get from the proverbial stone. However the the merchant banks increase has to take the biscuit. Banks are in the very slow process of changing Laser cards over to Visa Debit cards, in a move that most people assume was just re-wording a card that does exactly the same thing – allow you to spend money which you already have in your account, without the need to write paper checks.

Merchant Bankers Profits

Merchant Fee Increases

What myself and nearly every other retailer in the country didn’t realise was that some were infact positioning themselves for instant, supernormal gains.

A €500 purchase last year paid by Laser card would have cost the retailer roughly 15c. The same purchase for the same customer & amount this year, using their spanking new Laser replacement, Visa Debit Card, would cost the retailer €7.75 – An astonishing 5,100% increase in their fee’s on the transaction with the flip of a switch! The change happened because by moving from Laser which is a fixed fee charge to a Visa debit, they “can” charge a percentage commission on. Banks are one of those institutions which you tend to have as little contact with as possible, you assume if there is a change in their rates they will pass them on, like when the ECB change interested rates your mortgage changes too.

The above is a personal example from My Merchant Bank – Elavon, however other banks are also benefiting, some only taking double digit increases in the fee’s. As I’ve said before Merchant bankers are probably our least regulated banks in Ireland.

Now what really gets me is when I happened to stumble across this injustice and bring it to their attention, they “offered” to reduce the 5,100% rate increase to a MERE 360% increased fixed fee, but there is a further cost too for this mere increase. If you fix the fee at 54c, up from 15c, but better than 1.55%; Should someone spend only 5Euro, their cut on the transaction is over 10%. One way or another they will squeeze some money from the stone.

Now put this in perspective of your business. How much is this change in a technicality going to cost you? And were you aware of it? If you want to fix your fee on transactions via Visa Debit it is possible, so you will need to approach them and request to negotiate the deal. The problem with negotiating with these banks is there is no real leverage. They hold all the cards and competition amongst them is extremely poor, in my experience it’s been a tale of who’s the least incompetent to preform what is an automated function once you’re set up.

So rather than just take it on the chin and complain, I propose we do something about it. Lets get some leverage and form a buying group, with this group we use the combined buying power to not only lower or bring back transaction prices to, wait for it, “the good old days of the 2008”; but also we could insist on basic common decency like responses to calls and emails within 48 hours and advanced warning on when ‘minor’ changes in their industry are about to set us back tens of thousands on our balance sheets.

Very interested in your thoughts and comments below, If your interested in the buying group for merchant services (companies big & small welcome) send me a message on Twitter @Ronanob.

———————————–# Update 12/08 #———————-

As a further comparison, UK retailers are paying 12p to process visa debit cards Vs our 1.55% variable or 55c fixed fee options. Its yet another reason why Ireland is such an expensive country to do business in and has difficulty in competing in the export market.

———————————–# Update 16/09 #———————-

Thanks to all who have joined the buying group, I’ll be sending around information next week via email. In the mean time I really must stress that if you have a merchant account you should contact your merchant bank to find out if you are on a fixed or variable rate for visa debit and make an informed choice which provider is now offering the most suitable rates.

All of the merchant banks have been very willing to participate in quoting for the group so I believe we have a very fair process in place now, buying rates will reflect the merchants risk level, turnover and industry so that everyone is treated fairly. In the process Elavon have met with me and taken on board suggestions to address other concerns I had and make improvements in their security, which is a very positive step forward. I’ve also been impressed with AIBMS who have changed a good deal since we worked with them some years ago.

I still believe the industry has a long way to go however there is signs of competition and “a customer centric” approach, which is a very welcome insertion. Thanks to all of those in the media who featured this blog post in their newspapers, radio shows and tv news.

23 Responses to Changes from Laser to Debit – Increase Fee’s 5,100%

  1. I’d be very interested in a buying group re merchant services. I’m actually looking at alternatives at the moment. I’m with Elavon for the last 6 months for dollar, euro and sterling and find their fixed charges and set up fees to be exorbitent plus they are so inefficient and unhelpful, it beggars belief. I’ve had to copy emails to my bank manager to get some reaction! Ulster bank seems good price wise but they don’t do dollar accounts.

  2. Joe says:

    Pass on the charge directly to the purchaser as a line item on their receipt. You’ll be surprised what extraordinary lengths people will go to avoid paying that charge… like that 10c tax on plastic bags.

  3. having just had a machine installed yesterday (from elavon)

    this is the first time i have had a machine, and not fully understanding the negotiating i was kinda surprised at how much change in fees there is without me really putting any pressure on

    for example the rental, i started to question the price and before i finished the sentence, they dropped the rental by 7 euros!!!

  4. I was just going to ask who did the best merchant account when I came across this post.
    I will be following this with interest, as I am a very new company finally allowed a merchant account.

  5. colm lyon says:

    Ronan – you may have seen this post which relates to your comments.

  6. I’m interested in the buying group. Just been going through my Elavon statements and see the effect of “VIDE” – ouch! Thanks ROb, count me in
    ~ Helen

  7. Ronan says:

    Thanks Colm, I had missed that post. 24Million extra fee’s in 2010, that’s an exceptional amount. 2011 must be a big multiple of that as they’ve rolled out a lot more cards since.

    One of the gov officials called me last night and is going to bring this up in the Senad for discussion because of it’s obvious implications on jobs and SME’s.

    There has been a lot of interest on Twitter regarding the buying group, I’m keeping track of names and if we can’t pressure the banks to return to a reasonable fixed rate. I’ll be intouch with all those expressing interest in the comment section here.

  8. Caroline Martin says:

    AIB Merchant Services charge 30c standard fee on Visa (consumer) Debit card transactions . Charge 2.68% on commercial Visa debit and credit cards.

  9. Pingback: VISA Debit costs rise %,100% over laser - Blog post from Ronan O'Brien

  10. Aedan Ryan says:

    Ronan – well done on publicing this situation. Please count me in on the buying group. — Aedan

  11. Fantastic to see this issue being picked up on by the media following your post Ronan. Well done for that.

    It’s a little disturbing to see some of the inaccurate comments being published and completely ignoring any reference to your steps to take a pro-active stance on this (or even link to your post), but it’s still positive to see it getting a public airing so I’m sure you’ll take it on the chin.

    Do keep us posted on any developments with the gov official who was in contact, that’s another positive signal that I hadn’t expected. If nothing comes of it, I’ll certainly be working to raise awareness of the issue and push more people towards you regarding a potential buying group of businesses working together.

  12. Ronan says:

    Thanks for letting me know AIB charge 30c flat fee Caroline, had a hard time finding this figure. Still though, doesn’t excuse the sector in general increasing fee’s from 15c with the move. By comparison it’s 12p for our UK counter parts so unless Irish Merchants have significant higher costs, a explanation is needed. I really would question the 2.68% fee though, because that’s 1.13% higher than Elavon for the same cards. Price structure in the industry seem all over the place.

  13. Ronan, fair play to you on this. Count me in on the buying group.

  14. Bryan says:

    Fair play Ronan for getting active on this. I’d love to get involved in the buying group and we could all be winers. If you got 30-50 retailers onboa there would be alot of clout to kick down the rates. Keep us posted and thanks again.

  15. Philip says:

    Also interested in getting involved Ronan. All credit to you for bringing the issue to light.

    I’m only starting out in an online business & my credit card processing will be a huge element of the cost of the product.

  16. Very interested in your buying group; currently with evalon (getting crucified) an need to reduce what they’re charging me.

  17. Robert says:

    Hi Ronan, I’d be interested in this also. Just moving from UB to AIB due to UB not offering what I need. AIB made zero effort to win our business or lower their rates from standard. Also just got sent a threatening letter for not paying their €200 signing up fee on time! Nice way to win our business:)

  18. sean cronin says:

    Count me in on for the buying group. Retailers must resist this greedy grab by the Banks.

  19. Sarah says:

    Hi Ronan, I don’t have a twitter thingey so please take this as an interest to join the buyers group. Have been with AIB for donkeys and they are just appalling. Good luck to Robert with getting what he needs from them.

    A buyers group would be an excellent idea, primarily due to the differences in charges to individual merchants. We had a flat rate % from AIB on all cards. They decided to change the rates to different rates depending on what type of card is used. So, for example, a VISA Commercial Debit or Credit card will attract a .5% increased charge from before, but a Visa Consumer Debit will be charged at 10 c more than a laser card was previously. It’s unbelievable. Anyway, best of luck and please get in touch if you are setting up the group.

  20. Eddie Doolan says:

    I wish to be included in your buying group

  21. Fergus says:

    Ronan, how are things coming along. I am currently going thru the process of setting up a merchant account for my new business and finding huge discrepencies in the rates. I am sure I will not ask some of the correct questions either, and subsequently get caught. I would love to see full details of everyones charges so we could compare. certainly count me in to a buying group.

  22. Steve Skillington says:


    I run 5 online ecommerce websites and I would love to be part of your buying group.


  23. Ronan says:

    Hi All,

    Sorry but the buying group is now closed. I would suggest people do contact their merchants to re-negotiate rates based on recent changes in the system.

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