by Ty Hardison

Tester Amendment fails to get 60 votes to study Interchange regulations

Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) offered an amendment to the Economic Development Reauthorization bill to delay by 15 months the implementation of the Federal Reserve’s rule regulating debit interchange fees and the vote this afternoon was a close one. They needed 60 votes to avoid a Senate filibuster but only garnered 54 votes.

In a mega lobbying effort pitting mega retailers against mega banks, the mega retailers won the day and the amendment was defeated. The amendment had called for a six-month study by regulators to consider the fixed and incremental costs to the financial institutions of the new rules, whether the rules will adversely affect consumers, and whether the small issuer exemption is feasible.

So what happens now? The Fed issued a draft rule in … more

How does Square compare?

At Vantage we market the VeriFone PAYware Mobile iPhone reader for mobile merchants who have the sales volume to support having their own direct merchant account. (How is that for a disclaimer?) However, as a merchant advocate, I'm always trying to recommend the best, lowest cost solution for my clients, and when their situation and environment dictates, I have recommended Square’s mobile payment solution. Of course along with this I've also followed up to get a first hand account of what real merchants thought of the Square experience.

Some cool features of Square:

It's simple to get started.

After entering a dollar amount for the transaction, you can add a picture from your phone or take a picture of the product you are selling.

You can enter and report on cash transactions … more

Visa backs Square with Investment

Last year Visa completed its acquisition of CyberSource ( for approximately $2 billion in cash to expand its online payment, fraud and security capabilities. Since then Visa launched online shopping tool, Rightcliq; acquired PlaySpan Inc. (a payments platform to handle transactions for digital goods in online games, digital media and social networks); and signed strategic agreements to deliver P2P payments with CashEdge and Fiserv enabling U.S. Visa account holders to pay each other for the first time.

Now Visa is making a strategic investment in Square, a mobile payments start. Square's card readers plug into the iPhone jack for swiping cards and have been criticized for lacking encryption security. Perhaps with Visa's involvement they will address this issue given on the … more

MasterCard announces Processing Integrity Fee

In October 2009, Visa announced a Misuse of Authorization System Fee of $0.045 per occurrence. Now MasterCard with the introduction of a Processing Integrity Fee will begin to monitor compliance to the authorization guidelines with billing scheduled to begin on August 15, 2011. And like Visa, MasterCard has set its Processing Integrity Fee at $0.045 per occurrence.

While the purpose (encourage proper compliance with transaction authorization standards) of the two programs is similar, there are some differences in how they will monitor compliance. While both Visa and MasterCard will assess fees when authorized (approved) transactions cannot be matched to a clearing settlement record or an authorization reversal, Visa allows 10 days (20 days for T&E merchants) while MasterCard provides … more

Will debit only Interchange regulation back fire?

More evidence that the ill-conceived debit only Interchange regulation may back fire for small merchants this week comes from the MasterCard blog.

In a post, The Durbin Chickens Start Coming Home to Roost we find this quote “What banks’ shying away from debit rewards is likely to do is shift volume away from debit cards to credit cards for those who pay with plastic.” Of course as merchants well know, credit and reward credit Interchange is substantially higher than debit Interchange today.

In December 2010 when the Fed issued a proposal to set a price cap on debit card Interchange fees under new powers from the Dodd-Frank Act, we warned that “without a compelling financial incentive to develop debit that issuing resources will move away from this product line. … more

Banks change business models in response to regulations

New reports about ways banks will react to the Fed's proposal to cap signature and PIN debit rates continue to emerge.

According to the Wall Street Journal, U.S. banks are debating letting debit card transactions bounce like checks. And banks may charge more to merchants in order to guarantee debit card payments. While consumers could face bounce fees like they do for checks. Both developments could steer use away from debit cards to other forms of payment not regulated by Dodd-Frank.

In addition it was recently reported that banks are considering a $50 cap on debit card purchases.

Merchants that have relied on ATMs in store to avoid taking credit and debit card payments may soon find this strategy of steering customers to cash more difficult to implement as banks begin to increase ATM … more

Senate bill introduced to Delay Debit Interchange Regulation

Senate bill 575 calls for a two-year delay to Fed's debit Interchange regulation. A similar bill is expected to be introduced in the House. Senator Jon Tester (D) who introduced the legislation believes they have the votes necessary.

Read more at more

Banks consider $50 cap on debit card purchases

With the pending government price controls on debit Interchange fees, as predicted, banks will find ways to steer customer payment choice to higher priced cards. One method under consideration is to limit debit card purchases to a $50 max. In addition, banks may begin charging monthly or transaction fees to use debit cards.

Read Rules could change how you use debit cards for more information. more

VeriFone calls Square's Credit Card Reader Unsafe and Reckless (Video)

VeriFone has published an An Open Letter to the Industry and Consumers bringing to the forefront the issue of mobile credit card processing security. 

At issue is the ability for criminals to use unencrypted card readers to steal full mag-stripe data which can then be use to make fraudulent purchases.   Fraudulent card use is a problem for all merchants (and in particular card not present e-commerce merchants) who shoulder the losses. 

Square has made headlines shipping hundreds of thousands of free dongles (square card readers that plug into the iPhone jack for swiping cards).  In its announcement, VeriFone demonstrates how promulgating cheap readers enables criminals while making the point that the payments industry needs to take card data security seriously.& … more

5 Small Business Concerns with Debit Interchange Regulation

Vantage has been following the merchant Interchange rate debate and commenting along the way here on the Vantage ViewPoint blog. And that viewpoint is from the perspective of the challenges our clients, small business owners and entrepreneurs face. We take our role as a merchant advocate seriously. We believe it is important that the merchant community at least consider points of view that don’t seem to make the headlines in the over all debate.

First some background. As a merchant services provider, Vantage collects only a very small fraction of the fees merchants pay to perform services ranging from marketing, sales, underwriting, risk management, customer service, terminal services, 24x7 help desk, transaction authorization and settlement, funding, statement reporting, PCI … more