When a customer presents a credit or debit card for payment, the merchant has no idea what it will cost to process that payment. With the proliferation of card types, rewards programs and new payment technologies like PayWave, merchants have less visibility of their cost of sales than ever before. Consumers are incentivised to use the cards that provide the most benefits and quick and convenient “contactless” transactions, but these are commonly the exact scenarios that will drive merchant costs and retail prices higher.
The fees charged by banks and payment processors can vary anywhere from under 10 cents to over 3% of the value of the sale—it all depends on the type of card the customer uses. But it is the customer’s choice how much the transaction costs the merchant: not the merchant’s. The only choice the merchant has is to reject the card or impose a surcharge. Although surcharging is commonplace in some industries (taxis and airlines, in particular), surcharging seldom occurs in retail, whether in-store or online.
So for as long as the cost of payment at the point-of-sale is hidden from both the merchant and the customer, the merchant has little choice but to accept whatever card the customer offers. Current POS terminals cannot display the cost because the card type isn’t known until after the transaction has been processed. And that’s unlikely to change because the card schemes and the banks want their customers to use the higher-fee premium and super-premium cards.
What is needed is a price signal that informs customers about the cost of using one or another card. Unless the customer is forced to choose between paying a surcharge for using a premium card vs a much smaller surcharge for a standard debit card, the customer will continue to use the card that benefits them the most. Understandably, customers don’t like surcharges, but if it was their choice on whether the surcharge was applied or not, few would complain.
With Bluechain, retailers have a surcharging option. If a retailer enables surcharging, the surcharge is displayed for each of the customer’s eCards, so they can choose the card or account that costs them the least. And, typically, that will be their bank account, which will cost the retailer the least to process.
Only Bluechain can inform customers about the real cost of their credit and debit cards and drive down the cost of payments for the retailer. Savvy retailers can then be more competitive in the prices they offer to consumers who are willing to pay using low-cost payment methods.