Data from global payments marketplace, APEXX, reveals merchants within the travel sector are losing almost £18,000 for every £1m in corporate transactions due to a fear of overcharging on surcharge fees and a lack of understanding of the regulations.
UK legislation and pan-European regulation which came in to effect in January 2018 banned surcharge fees on consumer cards, but the ban does not apply to corporate and non-EU cards. However, merchants risk breaching EU law and facing heavy fines, as well as possible regulatory action if they overcharge their customers on a per transaction basis.
APEXX’s analysis of over 3.5m corporate transactions finds that merchants could recoup, on average, a substantial 1.77% of total transaction value. But the permissible surcharge amount varies dramatically for each transaction based on a multitude of factors such as card type, cardholder country of origin, as well as interchange and acquirer fees.
Most merchants don’t have access to the technology or vast data resources required to calculate these values in real time. As a result, fear of breaching EU law means that many are not surcharging at all and throwing away the equivalent of £17,700 for every £1m in corporate revenue. Those that do surcharge, are only surcharging a nominal amount, ultimately failing to recover the full amount permissible or are surcharging too much in breach of the applicable regulations.
Peter Keenan, CEO of APEXX, comments: “The sheer difficulty of calculating this dynamic value coupled with the threat of breaching EU law means many merchants are dissuaded from surcharging at all, leaving millions on the table.
“Some opt for ‘quick and dirty’ solutions such as charging a static rate of 1% on every transaction. But this still means merchants lose vast sums of money as the value will always have to be conservatively pitched under, while every transaction that comes in below the 1% will need the surcharge cost omitted completely. Either way, the merchants lose.
“At APEXX, our mission is to introduce transparency into the murky world of global payments. That’s why we’re launching our Surcharge Inspector to ensure merchants are no longer suffering from the surcharge squander.”
APEXX’s Surcharge Inspector is a first of its kind technology. It makes use of APEXX’s vast data pool to present real-time dynamic data, calculating the exact amount of permissible surcharge that can be levied on any card type, typically giving an ROI of 20x.