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Could scrapping card payment fees lead to losses for community pharmacy?


05 Jan 2018

The introduction of The Payment Services Regulations 2017 might cause pharmacy contractors to lose money.

From 13 January 2017, contractors will no longer be able to charge customers a fee when they pay for items with personal debit or credit cards, despite the extra cost to the pharmacy when accepting those payment methods.

The move follows the introduction of The Payment Services Regulations in 2017, which replaces The Payment Services Regulations 2009.

It aims to ‘create a more integrated and efficient European payments market, encourage innovation, and protect consumers by making payments safer and more secure’.

‘Being fair with pharmacists’

Mike Hewitson, superintendent pharmacist Beaminster Pharmacy in Dorset said that ‘to encourage people not to buy low cost generic medicines, such as paracetamol, and be fair with pharmacists, they used to have a notional charge’.

He said: ‘It was there as a disincentive but we rarely levied it. People can look at this as a cost of doing business as customers have become so used to using their card for everything, with lots of them not carrying cash anymore.

‘The explosion in the use of contactless payments has further eroded the use of cash.

‘I think that card payment processors aren’t giving good value for money, so it’s worth shopping around if people are out of contract.’

As contractors might not be able to recover the losses incurred from the new regulations, they may have to review their generic medicines and increase their prices this year to ‘cover the cost of advice’.

Not getting those additional fees means that lower value card transactions won’t absorb the processing costs from the card processor, which represents a certain percentage of the transaction value coupled with an authorisation fee.

‘Lower profit margins’

Mr Lewiston continued: ‘Cash doesn’t have this cost. So the merchant is effectively paying this charge as they can’t charge the customer anymore, which means lower profit margins.

‘I think the numbers may be quite small for a typical pharmacy, perhaps in the region of £250-£350 per month for their card processor.

‘I have a large retail business in one of my pharmacies and frequently have to pay more than £500 per month,’ said Mr Hewitson.

 


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