Fee Increases on the Horizon in Europe: Are You Ready?


Albert Drouart

CPTO & Co-Founder of Pagos

July 27, 2023

July 27, 2023

July 27, 2023

We’ve said it before, but it bears repeating: payment processing costs are complex, especially for card payments. Not only do you accrue different sets of fees from the three main players in the payments ecosystem—interchange fees from card issuing banks, network fees from the card brands, and processing fees from payment processors—but how much you owe in these fees each month varies. Whether due to changes in your processing strategy, government regulations, the data you pass with transactions, or card brand policies, your total processing costs can change at a moment’s notice. 

Given the shear number of payment processing fees you face and this variable nature of fee amounts, you likely count the total cost for payment acceptance among your top three largest business expenses. As such, you must monitor your payment processing costs closely to ensure your payments setup and operations remain efficient and affordable at all times.

In previous blog posts, we’ve explored how you can use our Peacock and Canary products to monitor your payments costs in whatever ways work best for your business. Today, we’ll dig into some upcoming Visa regulation changes, the impacts they’ll have on your payment processing costs, and how Pagos can help you minimize the financial impact of these changes.

Upcoming Secure Credential Framework Changes

Starting October 1, 2023, a change to the Secure Credential Framework around Visa transaction processing goes into effect in Europe. In summary, this change introduces an additional network fee for all non-tokenized Visa transactions (i.e. transactions processed with primary account numbers or PANs). Because this new fee isn’t applied to any tokenized payment credentials, it effectively incentivizes businesses to only use network tokens for European Visa transactions. This furthers the shifting global preference toward network tokens, as we’ve seen similar fee adjustments in US and Australian processing in recent years.

If you aren’t currently employing a network tokenization strategy, this new fee could significantly increase your overall cost of payment acceptance. The bulletin states that this fee will be 0.025% per approved non-tokenized transaction, meaning you’ll be charged 2.5 basis points (bps) on all PAN Visa card transactions made in Europe, where both the card holder and your merchant account are in Europe. Whether you process Visa transactions domestically (e.g. you’re a Dutch entity selling to Dutch cardholders) or intra-regionally (e.g. you’re a Dutch entity selling to cardholders in other European countries), if the transaction involves Visa PANs, you’ll encounter this fee increase. 

Predicting Fee Impacts in Peacock

With just a couple of clicks, we can help you forecast how this new fee will impact your business as it operates today. For example, if you don’t yet process network tokens in Europe, you can use Peacock to identify exactly how much of your current transaction volume will be subject to this new fee come October—and how much it will cost you to stick with a non-tokenization strategy. To do so, you can head over to the Processor Approvals chart in the Home dashboard of your Peacock Service Panel. Making use of the Processor and Card Brand filters, you can filter this chart to only show data for approved transactions made with Visa cards through your European merchant accounts. Here’s how that might look:

This particular sub-chart shows the approval rate and count of approved European Visa transactions processed in the last week. You can click the sub-chart name and select the value sub-chart to see the total transaction amounts that’ll face the 0.025% fee. 

Note: Coming soon, we’ll be introducing a new Tokenization filter to Peacock that will allow you to sort charts to only show data for transactions made with network tokens vs. PANs. Once this is released, Peacock will get you one step closer to precisely predicting the impact of this new fee.

Monitoring New Fees in Peacock

After this fee on non-tokenized Visa transactions goes into effect on October 1, you can use Peacock to monitor how it impacts your business moving forward. With our Costs dashboard, we make it easier than ever to identify how your payment processors may be charging you fees like this one. 

To start, you’ll use the same filters we used earlier to segment your dashboard to only show fees charged against Visa transactions processed through your European merchant account. From there, you can use our breakdown of fee categories and subcategories to identify who is charging what, and ensure your processors are charging these fees correctly and separately from other network token fees. Should you change your payments processing strategy in response to the new fee—by say, using network tokens for 50% of your Visa card transaction volume in Europe—you can even track the corresponding cost reduction over time. 

Are You Ready?

This impending change to the Secure Credential Framework in Europe is just one of many payment processing fee adjustments you’ll experience throughout the life of your business. They say the only guarantees in life are death and taxes, and we’ll argue payment processing has similar guarantees; the only thing you can be sure of is cost complexity and change. 

You can stay on top of your payment processing costs and be better prepared for cost changes over time with robust fee monitoring. Peacock by Pagos makes such oversight a simple reality. Alternatively, if you prefer a more automated approach to cost monitoring, our data anomaly detection product, Canary, can track your processing costs and only alert you when things change unexpectedly. Are you ready to get started?

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