by Ty Hardison

Analyst Speculate on Impact of Fed's Debit Card Proposal

On Thursday, the Fed issued a proposal to set a price cap on debit card Interchange fees under new powers from the Dodd-Frank Act. Since then there has been much speculation on its impact.

Interchange fees are paid to the banks that issue debit cards when they are accepted for payment. The fees that Visa and MasterCard charge are excluded from this regulation. Yet in question is their business model. Are the card brands value-added service providers or has their success turned them into just another type of utility company that should be regulated by the government?

Visa and MasterCard made headlines on the news with both experiencing major stock price declines. Merrill Lynch speculated that banks will seek financial concessions from Visa and MasterCard to make up for lost debit … more

Debit Card Chaos on Fed announcement

clip_image001 Breaking Payment Industry News – Fed announces Debit Card Rates and Rules for Comment

In a history making live webcast, the Federal Reserve Board announced proposed debit card Interchange rates and rules under the controversial Durbin amendment of the Dodd-Frank financial reform act. Noting the short time frame provided by the bill to undertake such an important and complex issue, the Fed voted unanimously to submit proposed debit rule recommendations for public comment.

In the debate over fees, the Fed is looking for input on the provision requiring debit Interchange to be “reasonable and proportional” to the cost that card issuers incur. The Fed is proposing to two alternatives: a $0.07 safe harbor price along with a $0.12 cap or a $0.12 cap for all transactions. … more

The Paperless Check Emerges in 2011

paperless_check_on_iphone I envision a better ACH. One that lets me pay anyone from any personal or business checking account I choose without having to give up my sensitive account information or authorization to withdraw funds. It would be very secure and I would control both the access and the timing of when I choose to make a payment. And it would be convenient. It would work with my existing bank so I wouldn't have to deal with the hassle of moving funds in and out of a 3rd party "holding account" like PayPal.

My mobile device would become my digital checkbook and registry. At my business I would write digitally originated checks straight from my accounting, CRM or ERP system. For proof of payment and for my own record keeping I would get the cancelled check image returned with my bank statement.

Anyone who … more

Substituting Debit with Prepaid

If you subscribe to the Vantage Viewpoint blog, you know that The Wall Street Journal article this week “Banks Pin Revenue Hopes on Prepaid Cards” confirms the prediction put forth in our analysis of the Durbin Interchange amendment back in June of this year.

As reported in the WSJ, mega banks are “exploring prepaid cards as a way to make up revenue that will likely be lost from federal restrictions on debt cards.” In our blog post under the section “Exemptions for government administered cards & reloadable prepaid cards” we envisioned the compromise exempting reloadable prepaid debit cards from Interchange regulation under the Dodd-Frank financial-overhaul bill would result in “banks moving more and more consumers to exempt prepaid card … more

Extreme Makeover in Savannah

It was an awesome week for everyone involved with the Extreme Makeover Project in Savannah that will air on ABC sometime in January.  Our partner, First Chatham Bank (FCB) in Savannah was selected as the bank and set up a Vantage merchant account for the week long fundraising event.  FCB was part of the last volunteer team on site while “Move that Bus” was filmed and finished the week with an Extravaganza hosted by Paula Deen.  The Simpson Family was so deserving of the new home, and we believe that funds collected will pay off the Simpson’s mortgage.   Congratulations to all on another successful Extreme Makeover Project! more

First ever Small Business Saturday

First came Black Friday, then came Cyber Monday, and now, American Express is launching the first ever “Small Business Saturday SM” on November 27th, the Saturday after Thanksgiving.  Small Business Saturday is a national movement to support and celebrate small businesses across the U.S.  While Black Friday and Cyber Monday drive sales to national chains and online retailers, Small Business Saturday recognizes the importance of small, independently owned businesses to the overall economy and local communities.

Small Business Saturday Initiatives include:

A major social media campaign to spread the word about Small Business Saturday and encourage people to give shout-outs for their favorite local shops and restaurants via Facebook and Twitter.

The 1st ten … more

US Firms Battle Late Invoices

According to the "Atradius Payment Practices Barometer" survey ( cash flow management remains critical for businesses. 

Key U.S. survey findings:

Approximately 39 percent of American invoices were paid "late"

Fifty-two percent of U.S. respondents reported customers had asked for extended payment terms over the last six months. Forty-eight percent had delayed payment without prior agreement.

U.S. respondents' main criteria for selling on credit terms are: "credit check," "track record" and "reputation"

Average domestic payment term: 28 days Average domestic payment duration: 28 days Average foreign payment term: 36 days Average foreign payment duration: 32 days

The most likely impact of overdue invoices was the need to "take specific measures to correct … more

VeriFone and PayPal team up

According to a TechCrunch post, VeriFone has announced that its PAYware Mobile App will be enhanced to support PayPal’s merchant acceptance application using VeriFone’s encrypted card reader for the iPhone.  Also, the PAYware Mobile App will be enhanced to support PayPal Bump technology that enables iPhone users to bump their phones together to transfer money between them.  In addition, PAYware Mobile will offer integrated transaction reports for PayPal and traditional card payments. 

For more on PAYware Mobile, the iPhone reader and service plan pricing visit: more

Bank Challenges Constitutionality of Interchange Regulation

As part of the Dodd-Frank financial reform bill, the Durbin Amendment mandates the Fed to regulate debit card Interchange. TCF National Bank filed a federal lawsuit alleging the Durbin Amendment is unconstitutional in violation of the Due Process Clause of the Fifth Amendment and the Equal Protection Clause of the Fourteenth Amendment.

The Fed is to release a draft of its Interchange rules by January 2011, and issue final rules no later than March 20, 2011. The bank is seeking to stop enforcement of any Interchange rules until the case can be heard. Once the rules are established, others may also initiate lawsuits against the validity of the Amendment.

This litigation may go on for years; with an ultimate decision likely being made in the U.S. Supreme Court. Until then, we may not see … more