Why do card payment services require a minimum monthly service charge (MMSC)?

In the last 10 years accepting card payments is a must, the use of cash has declined by 48% [1] as consumers enjoy the convenience and the security of buying with a card. The popularity of contactless payments is also on the rise with a fifth of all card payments now contactless [2], meaning that all businesses need to utilise every sales opportunity.

As with any business service, you would expect to pay fees, after all you can’t get something for nothing.  In this blog, we will discuss what a monthly minimum service charge is and why it can be applied to your merchant services account.

Acquiring banks and card schemes benchmark profitability by merchant, together they have identified a floor limit at which a merchant becomes unprofitable to them.  The MMSC was designed to ensure that all merchants deliver profit above this floor level, which in the UK is £15 per month and in Ireland €15 per month.

What does this mean for you?

If your monthly transaction charges (ie debit and credit excluding other costs such as terminal hire or PCI compliance costs) are lower than £15 then the MMSC charge will be applied less your actual transaction charges.  If your transaction charges are more than £15 then there will be no additional charge.

So, if your card transactions are around £1,500 to £2,000 per month then the £15 MMSC will not be applied.

It is worth shopping around for suppliers and working out your own sums, especially if your transactions are low. There are alternative means of payment acceptance such as PayPal or izettle, however although with these services there are no MMSC charges you will find that your rates will be higher, so it is worth doing your sums to see if you will be financially better off with them.

If you would like any advice or a quote on merchant services then call: 0333 311 0200 or email getintouch@netpay.co.uk

Author: Cerri Killworth, Marketing Manager, NetPay Merchant Services

[1] Source: https://www.ft.com/content/59692942-9f5a-11e5-beba-5e33e2b79e46

[2] Source: http://www.theukcardsassociation.org.uk/news/FifthContactlessNov2016.asp

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