Rising payment card charges have more than doubled one company’s bill for handling these transactions to €400,000 a year.
Fears are growing that increased “interchange fees” charged by Visa and Mastercard for handling transactions between businesses are adding to already high costs.
Building and heating and plumbing supplies business HPC Group calculates that its fees for card payments has risen 130 per cent to €400,472 a year from €171,000 over the last 12 months.
According to HPC, which trades as TJ O’Mahony and PH Ross, card companies such as Visa and Mastercard increased their fees last October, adding €229,000 a year to its costs.
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Seán McNamara, its finance director, says the companies did this as EU and Irish law bars them from increasing these charges on consumers’ cards.
The group sells almost exclusively to other businesses, mainly involved in construction, which use cards to pay for their purchases, leaving it heavily exposed to the fee increases.
“Since TJ O’Mahony’s customers are mainly businesses, we are being hit with disproportionate increases in the cost of processing cards, more than 134 per cent year-on-year,” said Mr McNamara. “This is extremely unfair and the cost increases have no basis in reality.”
He argues that card companies are simply subsidising the cost of processing consumers’ cards, whose charges are capped.
Mr McNamara noted that the companies cut fees slightly in July but said that the charges still imposed huge extra costs on the company.
When he sought a refund of overcharged fees and compensation from AIB Merchant Services (AIBMS), they directed him to the Financial Services and Pensions Ombudsman (FPSO).
That office told him it only handled complaints from businesses with turnovers of less than €3 million annually. Mr McNamara then raised it with the Central Bank which directed him back to the FPSO.
Holly Cairns TD raised the issue of card transaction charges with Minister for Finance Michael McGrath. He responded that the Central Bank of Ireland supervises card companies to “ensure that they are operating in compliance with the interchange fee regulations”.
Mr McNamara called this a fudge, as the card companies can charge businesses whatever they want.
“They are not answerable to anyone, and because of the lack of competition and alternative payment mechanisms, Irish businesses must accept these charges,” he said.
HPC maintains that banks such as AIB and Bank of Ireland are complicit in this, as they issue the cards to businesses to replace cheque books.
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Neither bank has increased its own charges. AIB did not comment. Bank of Ireland said it had no role in how Visa set its interchange fees.
Visa responded that its Irish fees were among the lowest globally. “Interchange fees enable banks to issue cards, innovate and invest in new technologies and experiences that benefit businesses, in particular small businesses, and protect them against fraud,” said a spokeswoman.
Visa has a merchant performance programme that caps interchange fees for businesses that meet certain criteria.
The central bank, which regulates financial services in the Republic, confirmed that consumer charges are capped here.
It said that Irish regulations barred payment service providers from seeking interchange fees of more than 0.1 per cent of the value of individual debit card transactions and more than 0.3 per cent of individual credit card transactions.
“Irish card payments are primarily facilitated by international card payment schemes such as Visa and Mastercard,” said the central bank. The bank added that it supervised these companies to ensure they comply with regulations.
Industry figures say that construction companies and builders’ suppliers are particularly exposed to the higher charges that card companies imposed last year, as many of those businesses use cards when dealing with each other.
