by Ty Hardison

Banks steer customers towards credit cards

According to the latest data from Visa, more people are starting to use credit cards, not for the line of credit, but as they would a debit card. And this is just what the banks are hoping for.

Visa reported for its fourth quarter that spending on Visa-branded credit cards in the U.S. grew faster than debit cards. The initial driver may have been punitive debit pricing, and even though that strategy failed to stick, one could argue that it did accomplish getting consumers to consider other payment options including credit cards.

Banks are increasingly promoting credit over debit in the face of shrinking debit Interchange. Both credit and prepaid cards are exempt from the recently imposed Fed regulated debit Interchange fee caps. To maximize Interchange fee income, banks will try to move … more

Will Bank Transfer Day Impact Merchants?

News story after news story are reporting the same thing – a lot more of us are switching to credit unions and community banks. This spike in activity is being attributed in part to the scandal over announcements by the mega banks to impose new cardholder debit fees. In fact, November 5th (that’s this Saturday1) – has been organized as “Bank Transfer Day”, a movement encouraging big bank customers to close their accounts and make the switch.

For those following the Durbin Amendment’s debit card Interchange regulations, and the impact on small merchants like we are, we have to ask - what good does it do merchants to have consumers switch to financial institutions who were made exempt in the Durbin Amendment from the Fed's regulated debit rate? Bank … more

Durbin’s Debit a Trick or Treat for Small Merchants

Merchant statements soon to reveal who gets savings from lower debit Interchange.

Next week, most merchants will get their first chance to see if they saved money on their card processing fees due to the Fed’s mandated lower debit rates that took effect October 1st. Typically merchants receive monthly statements at the beginning of each new month showing both processing activity and how fees were applied. Some merchants don’t open their statements and many merchants don’t understand how to read them when they do, but clearly if there was ever a statement to pay attention to, it would be the October statement that’s about to be delivered.

Merchant service providers are not required to directly pass the reduced rates of the Fed regulated debit transactions (and the … more

Visa’s Network Participation Fee scheduled for April 2012

On the Visa Q4 2011 Earnings Call yesterday, Visa stated "We're also moving forward with our modified debit economics, including the implementation of our network participation fee and the reduction of variable acquiring fees on debt, Visa debit and Interlink. As stated last quarter, we believe this offers merchants greater incentive to route transactions over our network and an opportunity to lower their per-unit transaction costs. As for details, we anticipate providing the specific pricing information to merchants and acquirers in January, which will go into effect on April 1." more

DepositGuard offers new and improved Property Rental Payments

DepositGuard is a payment technology platform for property rental payments that securely collects, holds and administers the deposits and pre-paid rents for vacation and residential property transactions, benefitting both renters and homeowners (including landlords, property managers and rental agents).

Unlike other payment methods, a merchant account is not required to accept Visa/MasterCard payments and there are no fees for homeowners to use DepositGuard.

DepositGuard is a neutral third-party account where the rental funds are parked for safekeeping. Both the renter and landlord have full visibility into the account and must be in agreement before the account can be created, changed, closed and any money released.

DepositGaurd gives renters more control over the payment process by … more

Will the banking industry apply a little Steve Jobs creativity?

So far the initial reaction to the Fed regulated debit Interchange from the major banks has been anything but creative. Predictable yes; creative no. We've seen many regulated debit card issuers adding restrictions to free checking and ending debit card reward programs. And Bank of America, JPMorgan Chase, Wells Fargo, SunTrust and Regions are all trying out variations of imposing new debit card usage fees on cardholders. These strategies are like adding a fee for paper billing statements to encourage the switch to e-statements, yet it’s hardly creative.

Steve Jobs was a master at consumer-driven markets and a great innovator who turned iTunes into a successful micro-payment platform. Surely we should expect bank innovators to adopt more creative ideas, right? For example, we know … more

Interchange pricing is the key to merchant savings

Have you noticed the media blitz over what’s being referred to as ‘Durbin Dollars’, the savings from lower Fed regulated debit Interchange rates? Of course the best way for merchants to realize the benefits of this legislation is to have an Interchange pass through pricing plan. At Vantage we have been evangelizing direct Interchange pass through pricing schedules (and working with merchants on managing their Interchange qualifications to lower their bottom line card processing costs) for over a decade. In the first paragraph of our October 2000 home page we advised merchants on the concept of “Interchange qualification management”. Seriously, who else was talking with merchants about managing Interchange back in 2000?

Your card processor is not required to … more

Visa ends Credit Voucher Interchange for debit transactions

Another over looked consequence of the debit Interchange revisions, effective October 1st, is the impact on cardholder refunds due to changes in the Visa ‘Credit Voucher’ program.

Visa has made modifications to its Credit Voucher Interchange fee program to coincide with other operational changes to comply with the new debit regulatory requirements ushered in by the Federal Reserve such as capping regulated debit card Interchange rates.

Credit Voucher Interchange fees are paid to the merchant acquirer (processor or service provider) by the card issuer when cardholder refunds are processed. This is the reverse of what happens during a sale transaction where the merchant pays a discount rate to accept the card payment.

With this Visa adjustment, the processing volume for debit … more

More signs of unintended consequences from government debit Interchange intervention

Interchange fees have evolved over the years to be priced at the transaction level depending on factors such as a merchant's industry category, the card product accepted (credit, debit, rewards, commercial, prepaid, etc.) and the method of acceptance (think card present or card not present). In addition to other nuances, special rates where also introduced for small ticket transactions less than $15.

However as a result of new government regulations impacting debit cards starting October 1, merchants accepting small ticket debit transactions are likely to experience higher rates.

MasterCard, Visa and Discover have all opted to support a two tiered debit Interchange pricing schedule for Fed regulated and exempt debit transactions. Yet in implementing the regulations, as discussed in … more now quoting new Fed regulated debit Interchange rates

Get an instant Merchant Rate quote based on the new October 2011 Interchange schedules and get a first look at the Fed's new regulated debit rates as mandated by legislation often referred to as the Durbin Amendment. Note that the new regulated debit rates do not apply to all debit transactions. The Fed exempted banks with assets under $10 billion from its mandated debit Interchange fee cap. Visa, MasterCard and Discover are all quoting a two-tiered debit Interchange fee to help protect small issuers. However, there are approximately 100 banks with more than $10 billion in assets and their cardholders account for approximately 75% of all debit transactions. Your card processor is not required to pass the reduced rates for these debit transactions (and the associated savings) on to your … more