“We only accept cards from spending 200 crowns and above,” reads the sign in a bistro on Prague’s Anděl. It appeared there only recently, around the time when film enthusiasts were returning from Karlovy Vary, who all too often had to leave their cards in their wallets. Many restaurants only accepted cash. Innkeepers usually argue about the high fees they have to pay for paying by card. EnglishCrunch asked how tall they are.
“The cost per transaction can range from one to four to five percent,” Pavla Břečková, vice-chairman of the board of the Association of Small and Medium-sized Enterprises and Self-Employed Persons, enumerates it. No one can accurately calculate the exact amount that a merchant will pay for someone beeping a rectangular piece of plastic at the payment terminal. It depends on many factors. In addition, the fee itself is composed of several smaller ones. What all is paid?
The fee is paid to the bank that issued the payment card. According to data from Komerční banka, this fee ranges from 0.2 to three percent, depending on which bank it is. On average, it is 0.45 percent. Other money goes to the card association. It is between 0.05 and one percent, again depending on the type of card. On average, it is 0.20 percent. There is also a full process and transaction fee, which is about 0.5 kroner per transfer. And finally, there is also a payment for amortization and service of the terminal, which is at least 290 crowns per month and terminal.
However, according to interested entities, nowadays the fee is around one percent of the transaction value. This is stated similarly by Visa, for example. “The fee has been decreasing in the long term due to greater competition on the market and more efficient technologies, such as the terminal in the mobile phone,” says Petr Polák, manager of Visa for the Czech Republic.
Karlovy Vary, colonnade, pizzeria with a spend of 900 CZK for two pastas and tap water, model summer 2023 during #quick : You can only pay by card if you spend over a thousand. Sorry like, but wtf????
— Luboš Krec (@LKrec) July 1, 2023
But it depends on what kind of terminal the merchant has, whether the customer pays with a credit or debit card, whether it is a corporate or consumer card. It depends on whether it was issued by a Czech, EU or non-European bank, or also on what the average payment is at the terminal, if it is lower, the fee is higher. And it also depends on the sales of the merchant. The bigger the turnover, the smaller the fee. Břečková adds that if the trader does not fulfill the contracted turnover in a certain month, then the percentage deducted from the entire transaction rises significantly.
Petr Menclík from the company Dotykačka, which provides merchants with cash register systems, states that its fees range from 0.6 to one percent, depending on the volume of transactions. The amount includes the payment terminal rental. “Clients with above-standard volumes can also reach a lower percentage fee, which is then negotiated individually,” describes Menclík.
It also gives an example of a typical transaction in the Czech Republic. In the case of Dotykačka, this is a payment with a Czech Mastercard debit card to a personal account. With a fee of 0.6 percent and a paid amount of 1,000 crowns, the merchant pays 9.82 crowns for all fees, i.e. less than one percent. For lower amounts, however, the percentage of fees is slightly higher. When a person pays 200 kroner, the merchant deducts 2.90 kroner, which is approximately 1.45 percent. At the same time, the average amount of card payments is decreasing. While in 2021 it was 444 crowns, last year it was 419 crowns.
“In gastro, they talk about tipping in connection with cashless payments. If someone tips, the cashless transaction fee is calculated from the total amount. Interestingly, our data dispels the myth that card payments deprive food service operators of tips. In fact, it’s the exact opposite,” describes Menclík.
However, fees can be paid in two ways. The Czech payment gateway GoPay, or rather its chief marketing director Jan Vodička, states that the resulting fee can be offered to the merchant either at a uniform rate, where the merchant always pays the same percentage rate of the transaction amount, or there is an option to offer the price for the payment in a so-called breakdown, which consists of several items listed above.
“Banks and card associations charge different fees for different types of cards. Importantly, the fee to the association and the issuing bank must always be stated, regardless of whether the merchant is offered a flat rate or a split rate. Therefore, there are situations where a single rate is more advantageous for both the merchant and the payment gateway, and vice versa.” Vodička explains. GoPay charges from 0.9 to 1.7 percent per transaction for its services.
Failure to recognize sales?
However, experts still do not agree on whether there are completely rational reasons for not accepting a payment card, or the desire not to admit part of the earnings to the system. Břečková from the Association of Small and Medium Enterprises says that a fee of one to four or five percent is really too much in some fields. Economist Dominik Stroukal also agrees with this, who for List of Messages stated that the moment the merchant has a margin of four percent, two percent is surrendered because of the terminal is nonsense. Co-owner of the Červený jelen restaurant and also a member of the board of the Chamber of Commerce, Luboš Kastner, on the other hand, states that merchants have a chance to avoid the fee.
“With the development of cashless payment technologies, they don’t have to pay anything, and that’s when they use the option of paying with a QR code, similar to invoices,” states Kastner. According to him, the reasons given for not accepting cards are rather excuses. “When you look at the data, it’s clear that accepting cashless payments leads to higher turnover and therefore profits,” complements.
“At a time when there are fee-free alternatives, all rational reasons for refusing to accept cashless payments become irrational, and often one can only speculate about the reasons associated with the gray economy,” says Kastner. The head of the Trade and Tourism Association, Tomáš Prouza, speaks similarly, according to him, the only reason for not accepting cards is the non-recognition of part of the sales and the avoidance of tax payments.
Often one can only speculate about the reasons connected with the gray economy.
However, card payment fees seem to be decreasing over time. The reason is primarily the pressure of competition on the market, but also technology. It is now possible to have the terminal, for example, on a mobile phone, this is the so-called Tap to Phone. “The Czech Republic is a very competitive market, terminal and gateway providers have to fight for their customers, that’s why the fee is lower than we expected,” describes Polák from Visa.
“At the same time, the Czechs are very good at adopting new payment methods, which reduces fixed costs,” complements. Menclík from Dotykačka adds to this that over the past four years the fees have decreased somewhat. However, the individual components of the fee move in both directions over time.
Without the option to pay by card, people leave
Either way, the number of terminals in the Czech Republic is increasing. “All statistics show that non-cash payments have been on the rise for a long time. The volumes and numbers of non-cash transactions are growing regularly. At the end of 2022, there were over 307,000 payment terminals in the Czech Republic, compared to 293,000 a year earlier, and only 199,000 at the end of 2018. described by Martin Dolejš, Mastercard’s sales development director for the Czech Republic and Slovakia.
According to Dotykačka data, the number of terminals is the largest in Prague, up to three quarters of gastro establishments accept them. The smallest acceptance is in the villages, but even there, sixty percent of businesses take the card. Among the regions, Karlovy Vary has the least acceptance. In total, 67 percent of businesses accept the card in the restaurant. Cafes and fast food restaurants are the most accommodating. On the contrary, they prefer cash in pubs, up to 55 percent of them do not have a terminal. For comparison, 74 percent of small and medium-sized businesses accept cards in retail.
The consensus is that more and more people prefer to pay by card. Mastercard data show that Czechs pay by card or mobile phone in 59 percent of cases. It would be up to 77 percent if they were not rejected in 18 percent of the cases with the card. The KB Smart Pay survey then shows that the number of cases where people turn around and leave when the card is rejected is increasing. Last year, they were 49 percent. Now it is already 54 percent of people. At the same time, the number of those who pay exclusively in cash is decreasing. At the turn of the year, it was five percent of customers, now it’s only three percent.
2023-08-05 03:49:12
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