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
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
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
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
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
In October 2010, both MasterCard and Visa entered into a proposed consent decree and final judgment with the Department of Justice that required both payment card networks to modify their policies and procedures regarding the merchant’s ability to recommend any preferred card brand or card type in United States. The consent decree and final judgment requires that both card schemes direct their acquirers to provide US and US Territory merchants with notice of the final judgment and a description of the their rules changes and the POS practices that merchants are expressly permitted to engage in pursuant to the terms of the judgment. The description of the rules changes can be found at the following links:
Visa http:// … more
ABC News reports that Wells Fargo to Test $3 Debit Card Fee. Major banks have already begun to change qualifications on free checking accounts and end debit rewards programs.
An it appears that the anticipated result of these actions will be to steer consumers away from debit and toward reward credit and charge card products that carry more expensive merchant Interchange rates.
"An Associated Press-GfK poll last month found that about two-thirds of consumers use debit cards more frequently than credit cards. When asked how they would react if they were charged a $3 monthly fee for their debit card, 61 percent said they'd find another way to pay. If the fee was $5 a month, two-thirds said they'd do the same. If the fee was $7, the figure rose to 81 percent."
Our concern for small … more
PayStream Advisors survey shows Increasing Adoption of Automated Workflows in Invoice Processing
Automating the invoice approval process is the next logical next step for companies that are already reaping the benefits of front-end electronic invoice systems. Organizations that have experienced successes through employing digital imaging are seeing visible improvements and are actively moving towards further AP automation.
Research conducted by PayStream Advisors confirms these trends and notes that automation to date has been operations driven, with quicker approval of invoices being the main cited benefit. Companies in the survey also experienced lower processing costs and increased productivity.
Automated workflow solutions in the accounts payable (AP) arena are maturing as the … more
Small business owners are a new favorite target for hackers hoping to take advantage of weak security in small business environments. This excerpt from a recent article in the Wall Street Journal article Hackers Shift Attacks to Small Firms sums up the new reality:
“In the time it takes to break into a major company like Citigroup Inc., a hacker could steal data from dozens of small businesses and not get detected, says Bryce Case Jr., a former hacker who broke into several government and corporate websites a decade ago and now runs an online message board for hackers called Digital Gangster. Now that small companies use computers, "the juice has become worth the squeeze," he says. "Even a pizza place has addresses, names and credit-card information."
Whether you store card holder … more
In June, the Fed announced final debit Interchange rules. Now we are starting to learn more about how Visa and MasterCard will approach the transaction routing provisions that ban exclusive affiliations between card networks and issuers of debit cards.
Under these new rules, debit card issuers must add at least one unaffiliated network to each debit card. For example, Visa has exclusive arrangements with issuers to use both its signature debit and PIN debit networks. Now debit card issuers will need to add an alternative network to Visa.
In response, Visa says they will implement a new Network Participation fee that will be based on a merchant's size and number of locations while at the same time lowering the variable rate charged per transaction. This Visa strategy is intended to … more