OTP has expanded their cards: this is what they earn on their credit card when they pay in the store

Banks and other payment market participants are reluctant to disclose details of electronic payments market fees and commissions, usually referring to individually defined rates or providing single broadband with no defined segments. Meanwhile, traders with lower turnover mentioned high trade commissions of 3-4 percent a few years ago. In 2016, for example, Mihály Varga mentioned a 3-5 percent charge when announcing the state POS program, but we know that since then, partly due to the government program, partly due to market effects and programs, this commission level has decreased significantly, now we can find out how long OTP these awards went down.

In Hungary, one of the largest players in the market for issuing and accepting cards is OTP, which has now spread its pages one by one and described in detail why such costs are charged. The Prosecutor’s Office named the following costs related to the transaction:

• the exchange fee,
• the system fee,
• and commercial rates.

The first two are determined by the card companies and the third by the credit institution. The latter includes, for example, the costs of processing the transaction and complying with mandatory card company and legal regulations, and the benefits of the bank are also shown here.

The rates listed in different cases charge a different purchase amount, as they include a fixed fee, and it does not matter if you pay with the OTP card itself at an OTP terminal (this is called on-us traffic) or if the service providers acceptance and issuance not the same market actor.

Examples of OTP:

In a small shop, the customer buys breakfast for a thousand guilders, which he pays at the checkout with a debit card with the Mastercard logo, which has a significant market share in Hungary. The financial institution that issued your card and accepted it at the store is the same. These costs are for the merchant:

• The interbank rate is HUF 0, since the financial institution that issues and accepts the card is the same.
• The system fee consists of two elements. 5 HUF per transaction and 0.1333% of turnover (remaining in our example, for purchases worth a thousand guilders, it is 1,333 HUF).
• The commercial rate is 1%, which in our case is 10 HUF.
• Adding the elements (0 + 5 + 1.333 + 10) we obtain 16.33 forints, which is 1.63% of the thousand forints.

Continuing with the 1000 forints example, we examine the case where the buyer’s card issuer is not the same financial institution as the store’s accepting partner, but both banks are Hungarian.

• The interbank rate for debit cards is 0.2%, that is, 2 HUF
• The system fee still consists of two elements. 8 HUF per transaction and 0.1% of the turnover (1 HUF for purchases worth 1,000 guilders).
• The commercial fee rate is 1%, that is, around 10 forints.
• Adding the elements (2 + 8 + 1 + 10) we get 21 florins, which is 2.1% of a thousand florins.

“OTP Bank’s share of the self-issued cards market is around 40%, that is, purchases are normally made close to it with an OTP card,” said Noémi Hideg, director of the Department of Acceptance and Development of Credit Cards. OTP Bank.

As the OTP points out in its communication, some banks do not break down the costs of paying by credit card to the merchant into items, but indicate a uniform fee for each transaction in your bid. “In the example of our 1,000 HUF breakfast, we got two results for the total cost: 16.33 HUF and 21 HUF (1.63 and 2.1%, respectively). With a flat rate, we can count on 19.5 HUF (1.95% – In this system, the merchant pays this amount for every thousand guilders of transactions, regardless of the issuer and acceptor of the card. Detailed prices. “

What additional costs should be considered if someone requires a POS terminal?

The rental of the terminal must also be taken into account when calculating costs. It costs less than desktop terminals if the contractor has wired internet to which the device can be connected. In this case, the user will not bear any additional communication costs. The cost of portable terminals with GPRS communication (these phones have a SIM card like them) can also be borne by the merchant, similar to online payments. It is also worth examining if there are additional expenses, such as installation, maintenance, training; these can vary from one acceptor to another.

The obligation, which will take effect from January, can be fulfilled not only with a credit card, but also with an immediate payment solution. In theory, it is also a solution for the merchant to simply post a QR code or secondary ID and customers can refer to it, but this also raises various problems and inconveniences, we have written more on this topic here. Anyone who doesn’t just want to fulfill the obligation is likely to go for a more serious solution.

In OTP, in addition to credit card payment, immediate transfer is also available in the SimpleBusiness application; By the merchant, the cost of this solution for the transaction is now set at 0.99%, that is, the merchant has a total cost of HUF 9.9.

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