If I am notorious for anything it’s for not being good at sums: hence my word-mongering career.
However, it looks like both debit and credit card charges are going to go down a bit! I didn’t find this out myself. I am indebted to Laurence Haring for the news. Laurence runs two garages in Somerset: Buncombes Garage, Highbridge, and Monkton Combe Garage in Bath, and has fingers in other pies including a consultancy role trouble-shooting and helping SMEs.
He wrote: "Visa debit cards are changing from pence per transaction to percentage-based charging (like credit cards). Retailers should therefore be aware, from what I am told, that cashback will now be chargeable in the same fashion."
I asked him if this would put the lid on cashback and he replied: "Yes, the main reason to provide cashback is with debit cards being a fixed rate it reduces cash transmission charges; so technically cash banked for nothing."
Laurence uses payment services provider RSM 2000 and he forwarded a letter from them explaining the changes. It said, in part: "Both Visa and Mastercard have announced changes in an attempt to pre-empt enforced action on their charges by the EU Payments Regulator."
From March 1, 2015 Visa will be changing the way it charges acquirers such as WorldPay, for consumer Visa debit charges.
The letter adds: "Merchant acquirers have now reflected these changes in the service charges they in turn will charge their merchants. This change will affect all payment providers including ourselves."
The new Visa debit percentage rate is 0.36%.
Me being a sort of goes-with-the-job cynic, I asked Laurence whether this meant that the cost would go up but he replied: "No, in fact I have run it through our pricing model and (amazingly) it works out cheaper! The equilibrium point is circa £25 and usually debit card transactions are lower than credit card."
The letter went on to say: "MasterCard is planning to make some changes to the rates it charges acquirers for credit card payments from April 2015. These are likely to result in a significant reduction in costs over the next 18 months. Acquirers are currently still working on how they can pass these changes to their merchants."
Full details of how the MasterCard changes will affect retailers aren’t clear yet.
Going back to the Visa debit card changes, Laurence had asked RSM about cashback and then had it confirmed that the percentage-based charge will be applicable on cashback. He adds: "This issue, seemingly, had not been recognised or pinpointed by the acquirers... or maybe it had but they just kept schtum!"
In his opinion the issue of cashback charging has been somewhat "covert" and he wonders how many other acquirers have notified their customers.
A rather chilly response
Well, any response would have been better than this one. I cannot seem to get an answer from Wall’s Refrigeration for Suresh Kannan, manager of Bournville Service Station, Weston-super-Mare.
He rang regarding a spare part for his Wall’s freezer. They mistakenly ordered a top-shelf upper lid for their Maxi Vision freezer instead of a top shelf bottom lid. They paid £130.40 in total to Wall’s Refrigeration, which is now telling them they cannot swap the lids. It’s in the terms and conditions. Bournville is happy to pay for the carriage charge for the swap. And the lid is unblemished, unused. Useless to Bournville but no doubt useful to others. Is there some reason why this swap cannot happen? I asked Wall’s PR company, Clarion Communications, on February 3.
I gave the PR lady one week. This came and went so I sent a reminder. I got an apology from her saying that they mistakenly had the deadline down for the end of that week so I agreed to this.
That came and went too. So I sent another reminder.
On February 16, the PR lady said: "We are working on getting a response for you, but as this has to go through the Wall’s team internally, it’s a slightly longer process. We will have this over to you as soon as we can."
By the time my copy was due to go to the production desk it was February 19 and still zilch from PR company/Wall’s.
One could make several observations about this.
It is always tiresomely delay-ridden when a third party is involved and, in this case, there are two third parties involved. I am bidden to go through a public relations company for a response from its client Wall’s. That is the protocol.
Wall’s presumably has to go back to its refrigeration supplier because, as I think we all know, Wall’s makes ice cream, not fridges (although the invoice and the website for Wall’s Refrigeration has Unilever House as its registered office so maybe it is just a separate division).
I think we all know too how hard it is to put the supply chain into reverse. Works very well the other way around.
Now think about the publicity. Not good is it? Not good on two fronts for Wall’s. Number one, as Suresh says, the unit doesn’t look very nice. There are three layers to the freezer. Two are fine but the third one the one on top is no use and the whole shebang has Wall’s name on it.
Then there is the adverse publicity that this column will bring. I can only argue that Wall’s brought this upon itself and I would welcome an eventual response perhaps in time for next month’s column?