As we welcome in PSD2 (Payment Service Directive 2), RTS (Regulatory Technical Standards), SEPA updates and general regulatory changes, what does it all mean for conducting business in the short term?
Well, on the whole, a working model of services between the banks and third-party providers (TPPs) is being developed. Networks are being improved and banking service levels are being communicated and opened.
This is good news for the majority, but it presents challenges for the financial services industry – namely partnering with and delivering a consistent message to businesses. But businesses that process payments should immediately benefit from the ease of payment management, improved data handling and transaction/settlement speed.
One imminent change that businesses should be preparing for next month – yes, January 2018! – is the end of surcharging in the eurozone. “Surcharging” is the common practice of charging people to make card payments, and in 2010 the UK government estimated that credit and debit card surcharges totaled somewhere between £316m and £630m. This practice is especially evident in the aviation industry. Soon, however, it will become illegal for businesses to pass on card processing fees for online payments.
The EU directive suggests that businesses can simply absorb the costs, but some experts believe that instead they will just hike up the prices or reallocate the fee elsewhere in response. For merchants, this could put increasing cost pressure on higher average ticket value transactions, as the cost of processing can no longer be shared or passed on. The cost base of products will potentially need to be reviewed.
So what’s next? How will the new surcharging laws affect costs for businesses and consumers? We will soon find out, but in the meantime at Trustly, we look forward to discussing how bank transfers can bolster your payment mix and helping you to manage your total cost of payment distribution. Don’t hesitate to reach out to our Director of Travel, Michael Parkinson, at firstname.lastname@example.org to learn more.
Trustly is a member of ECB-driven Euro Retail Payment Board’s working group on payment initiation services and in that forum holds the position as co-chair of the API sub-group. Trustly is also a member of the Payment System Market Expert Group, which is an advisory body to the European Commission.