expense management tools and policies. If they want to move things centrally, they are going to have to change to automated expense management systems.” Parpou also expects businesses to shift
more of their big-ticket purchases, such as air and hotel, to centrally billed accounts, either on lodge cards or through virtual payments. Unsurprisingly, Simon Barker, chief executive of virtual card technology provider Conferma, agrees. “This is going to drive inefficiency out and innovation
Merchants will be more tempted to refuse cards that attract higher interchange fees
in,” he says. He expects new issuers and technologies for corporate payments in consequence over the next few years.
INTERCHANGE FEES: KEY POINTS
• The EU Interchange Fee Regulation (December 9, 2015) caps interchange fees at 0.3 per cent for credit cards and 0.2 per cent for debit cards.
• American Express cards are exempt from the cap. So, too, are ‘commercial cards’ – but individual pay corporate cards (where the card company takes money from the cardholder’s private account) have been defined as ‘consumer cards’ and, therefore, are non-exempt.
• Issuers will almost certainly have to issue new cards for individual pay customers, and charge fees because they will earn less from them, or withdraw this product.
• There are consequences for other corporate cardholders, too. Some retailers may refuse to accept them. From 2018, consumer cards cannot be surcharged by merchants, but commercial cards can. The commercial card exemption will be reviewed in 2019.
12 BBT CORPORATE CARDS SUPPLEMENT 2016
SURCHARGES There are also implications in the regula- tion for clients using corporate pay plastic. Merchants will be more tempted to refuse cards that attract higher interchange fees. And from January 2018, the fees being introduced now for individual pay cards may look like a price worth paying. That is when the EU Payment Services Directive II takes effect. The directive will outlaw merchants surcharging consumer cards – including, of course, individual pay cards – as many airlines and other travel-related suppliers do today. However, they can continue to surcharge non- consumer cards. Another date to look out for is 2019, when the EC will review the Interchange Fee Regulation. Head of the EC’s payment systems unit, Rita Wezenbeek, has already said the exemption for commercial cards will be on the agenda. “Issuing banks are telling us they have got to look at their book again,” says Barker, who adds that some small and medium issuers are already considering withdrawing from the commercial card market. “The exemption for corporate cards may disappear when the EC holds its review, so moving to corporate pay may only be a short-term option.” Not everyone agrees. “It’s a threat, but I
wouldn’t give up the game at this point,” says the anonymous card exec. “Govern- ments are worried about the impact on commercial cards because they are an
WHAT IS A COMMERCIAL CARD? THE OFFICIAL
DEFINITIONS
“‘COMMERCIAL CARD’ MEANS ANY CARD- BASED PAYMENT INSTRUMENT issued to undertakings or public sector entities or self-employed natural persons which is limited in use for business expenses where the payments made with such cards are charged directly to the account of the undertaking or public sector entity or self-employed natural person.”
Article 2(6), Interchange Fee Regulation, Official Journal of the European Union, May 19, 2015
“THE INTERCHANGE FEE CAPS provided for in the IFR apply to all transactions except commercial card transactions where the funds that are used to settle with the issuer come directly from the business Account ... The fact that the individual cardholder might receive a statement or ‘bill’ showing the transactions made on that specific card will not affect this.”
UK Payment Systems Regulator final guidance on the EU Interchange Fee Regulation, March 24, 2016 (use of bold type is by the regulator)
important credit line for businesses, and the EU will have achieved the vast majority of what it wanted to do anyway.” Regardless of what type of card pro-
gramme they have, all travel managers should monitor a story that remains far from reaching its final chapter.˜
In association with
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