The South African Reserve Bank (SARB) has slashed the costs of card transactions, which is good news for retailers – and hopefully, consumers.

As part of its Interchange Determination Project, the SARB has restructured the fee system related to the amounts retailers need to pay the banks on card transactions, reducing certain card costs by as much as 34%.

Notably, the group found that the current card categories for fees – being debit, credit and hybrid (cheque) cards – needed to be revised, with the new rates effectively eliminating the “hybrid” card category.

According to the SARB’s quarterly bulletin, the new rate structure will result in twelve rates for cards, as opposed to the existing three rates, and a fixed rate for cash-backed transactions performed at point-of-sale.

It will be implemented in March 2015.

This, the bank said, is because debit cards and cheque cards performed similar functions in terms of transaction. Cheque cards, however, drew much higher fees from retailers.

With cheque card transactions being treated as debit card transactions, 1% will now go back to retailers. In theory, these savings could in turn, be fed back to consumers.

The new rates now focus entirely on debit and credit transactions, the type of security present, and whether or not the physical card is present (such as during online purchases).

Old fees

The new fees are as follows:

Debit card fees

Credit card fees

According to former FNB CEO, Michael Jordaan, who first brought the news to light, the new fees are “a big deal” for retailers, as accepting cards in now cheaper than accepting cash for transactions.

The SARB said that the revision of fees will not be once-off as it aims to monitor the rate on an annual basis.

*EMV – Europay, MasterCard, and Visa.