Bitcoin is expected to stand out as Europe plans to reduce credit card transaction fees

It's no secret that small businesses are struggling to control the growing costs of doing business. Especially when it comes to accepting payments, the fees can add up to a large sum in a relatively short period of time. A new European initiative plans to reduce these transaction fees to a maximum of €1,500 a year. That is, credit card processors will give retailers the full discount rate instead of rounding off every time.

Reduce transaction costs for small businesses

Anyone who has ever paid for a business transaction with a credit card will know about transaction fees, which are added to any purchase made with a plastic card. This fee is paid to the credit card processor, which in most cases means one or more banks that settle the debt between the cardholder and the retailer. These fees usually range from 1% to 3.5% of each transaction, and the numbers can quickly add up.

A new European initiative wants to put an artificial cap on transaction fees, with the biggest impact on payments made with Visa or MasterCard credit cards. In Belgium, every credit card transaction is charged a 1.45% fee, which will now be reduced to 0.85%. The fee reduction process must be implemented by credit card payment processors like Worldline.

However, there are growing concerns that credit card payment processors are not providing retailers with the full amount of reduced transaction fees. The Belgian government is responsible for ensuring that everyone involved implements and adheres to these reduced fees. In addition, these reduced fees must also apply to online and mobile payments.

From the perspective of a single transaction, these reduced transaction fees are not a large amount. However, when we calculate the total amount of money successfully traded by credit cards on an annual basis, the transaction fees are reduced by nearly 110 million euros per year. Remember that this amount is to combine debit and credit cards.

One of the biggest concerns for consumers is what would happen if some retailers charged customers extra fees during credit card transactions. Although the amount is quite small, the EU will still decide whether to declare this business practice illegal in the future.

Bitcoin transactions are a very cheap alternative

Unlike credit card transactions, Bitcoin payments generally come with very low fees. More specifically, the transaction fee charged for each funds transfer, as well as the conversion fee for converting Bitcoin to fiat currency, are very low. Depending on the Bitcoin payment processor you use, the fee for each conversion can range from 0% to 1%.

In conclusion, Bitcoin payments are a very cheap option for any merchant, mainly because Bitcoin payments do not require investment in additional infrastructure, such as payment terminals. In addition, all businesses that sell goods or services to international customers do not have to worry about foreign exchange rates if they choose Bitcoin payments.