Archives / 2009 / November
  • Vote to Abolish Check Clearing

    According to an article in Bank Technology News, the United Kingdom may stop clearing checks by 2018.  A number of large retailers in the UK have already stopped taking checks or are phasing them out with only three percent of retail spending by check in the UK in 2008, a decline of by about 66 percent over the past two decades.

    The trend toward cards and electronic payments has become strong enough that the largest banks in the UK have arranged a vote to stop clearing checks.  Estimates of check clearing cost are roughly $1.66, or about four times as much as electronic payments and would lead to substantial savings for banks. more

  • MasterCard requires support for Partial Approval, Real-Time Reversal, and Balance Response

    Recently, MasterCard announced rule changes and supporting requirements for acquirers and their merchants in the U.S. region to support partial approvals, authorization reversals, and balance response in order to improve debit card (including prepaid cards) purchase experience at the point of sale (POS).  Support for these transaction types is required for all Debit MasterCard and Maestro card programs in the U.S. region.  While Issuer support for these requirements was effective November 2008, MasterCard intends to implement this mandate for merchants and acquirers in three phases beginning May, 1 2010.

    MasterCard decided to move forward with these requirements after extensive discussions with issuers, processors, program managers, acquirers, and merchants, where high decline … more

  • No clear winner in the GAO Interchange report

    As we posted back in May, 2009, GAO to Investigate Merchant Interchange Fees, The United States Government Accountability Office (GAO) released its report titled: Credit Cards, Rising Interchange Fees Have Increased Costs for Merchants, but Options for Reducing Fees Pose Challenges on November 19, 2009.

    There was no clear winner in the GAO report. Each proposed remedy to lower Interchange examined by the GAO would impact stakeholders differently, for example, merchants verse card issuers or large merchants versus small merchants or large issuers vs. community banks. One of the most important stakeholders to the politicians are the consumers and the GAO suggested that savings from lower Interchange would not be pass along in every industry and only in competitive markets. The GAO study … more

  • Interchange Analysis by the GAO

    Visa and MasterCard Interchange rate schedules have become increasing more complex, as hundreds of different Interchange fee rate categories for accepting credit cards now exist.

    In 1991, Visa and MasterCard each had 4 standard domestic credit card interchange fee rate categories. By 2009, Visa had 60 and MasterCard had 243 different rate categories that could be charged to card transactions, although not all of these rates apply to all merchants.

    The increase in the number of rates occurred as different types of merchants and cards were added to their Interchange rate schedules. For example, the networks introduced new rates for certain industries that previously had not accepted cards (such as energy utility companies or government agencies) or for new methods of shopping (such as … more

  • GAO Interchange Study Option 1: Limiting or Capping Interchange Fees

    Setting or limiting Interchange fees would need to address who would regulate, at what level to cap rates and which payment types would be included in the regulation to name just a few. Beyond these implementation questions, others should be considered like, will greater regulation bring more secure, innovative, alternative payments to market faster or will this regulation slow R&D?

    A significant advantage of capping or limiting interchange fees would be that it would reduce interchange fee costs most directly. The GAO study did not make any recommendations but rather posed various scenarios of capping Interchange at current levels, setting a maximum rate, setting at a level significantly below the current rates, apply caps to select Interchange rate categories like rewards cards or … more

  • GAO Interchange Study Option 2: Requiring the Disclosure of Interchange Fees

    Requiring Interchange fees to be disclosure to consumers would provide information about payment costs in an effort to influence consumer choice. However, information alone is not likely to have the desired effect of stopping people from pulling out their reward card. Plus, significant implementation costs for both the merchant and the issuer along with the level of confusion on the part of the consumer who would need to be educated on the payment industry pricing structures.

    Disclosing information about Interchange fees to consumers would incur the costs of updating technology and signage to allow for such disclosures. For disclosure in merchant receipts, merchants would incur the cost of changing their receipts. Issuers would incur cost of changing card statements to add disclosures. more

  • GAO Interchange Study Option 3: Loosening Restrictions on Merchants for Card Acceptance

    Prohibiting card networks from imposing rules on merchants, such as those that limit merchants’ ability to discriminate among different types of cards or levy a surcharge for credit cards is one of the most popular remedies designed to hold Interchange rates in check.

    The GAO reports that removing the anti steering rules appears to have various advantages. Merchants could surcharge or refuse certain cards, make cardholders using rewards cards more aware of and to bear more of the cost of the rewards from which they benefit. This option also may require the least intervention, as merchants could decide whether to add surcharges or refuse certain cards based on their own customer mix. In addition, the potentially anticompetitive effects of these rules are also the subject of a … more

  • GAO Interchange Study Option 4: Allowing Merchants and Issuers to Directly Negotiate Interchange Fees

    This option involves granting antitrust waivers to allow merchants and issuers to negotiate Interchange rates. Collective bargaining by commercial groups, such as groups of merchants or businesses, can violate U.S. antitrust laws, an exemption from those laws would be necessary to facilitate such a process.

    Valid concerns exist that such negotiations could harm small merchants and small issuers, which do not have as much leverage as larger participants and, in some cases, lack the resources to participate in bargaining sessions. It would be difficult to ensure that small issuers and small merchants benefited from collective negotiations. Small merchant would find it difficult to participate in such negotiations because of limited resources.

    A significant legal barrier to implementing … more

  • POS PIN Entry Device Vulnerabilities

    Compromised point-of-sale (POS) PIN-entry devices (PEDs) equipped with tapping mechanisms designed to capture PIN and card data have recently been found in the U.S. marketplace. Visa has received an increasing number of reports regarding POS PED theft from merchant store locations. Evidence indicates the POS PEDs are being physically removed from their locations and replaced with modified devices designed to skim account and PIN data. Surveillance has shown that suspects in most of these cases were able to remove and install a POS PED in under one minute. This type of fraud typically occurs in merchant locations with “after-hours” operations where there is minimal customer traffic or employee supervision over cash registers.

    Visa strongly recommends that merchants use … more

  • Rare Praise for Credit Card Acceptance

    I read the New York Times article New York’s Cabbies Like Credit Cards? Go Figure with interest as it told the story of  how New York’s cabbies originally resisted accepting card payments and how card acceptance has emerged as an unlikely savior for New York’s taxi industry. 

    In the beginning, when forced to adopt card acceptance, drivers went on strike citing the burden it placed on drivers.  A short two years later overall ridership, revenue and tips for drivers have all increased. 

    Name another industry right now where you will read the following statements from merchants, trade associations and government commissioners about credit cards being good for business.

    “It’s better,” said Naveed Shah, 35, a driver for five years, … more

  • Vantage launches new site dedicated to B2B payments

    Vantage has launched a new web site at focused on addressing the specific payment needs of small and mid-sized (SMB) business-to-business (B2B) and business-to-government (B2G) enterprises. offers payment acceptance policies, strategies and best practices to lower cost, increase productivity and enhance security.

    Today’s most successful SMB are using a mix of technology and best practices to effectively manage their accounts receivables to increase cash flow and working capital. Managing credit risks, using lockbox services to automate paper-based processes and following AR best practice invoice tracking and follow up are being viewed as smart strategic decisions, giving SMB a competitive advantage once reserved only for big business.

    Likewise, … more

  • Hiding in the Price

    As you know I follow the debate on the merchant fee called Interchange.  Interchange is the largest component of the discount rate paid by merchants when accepting a credit card payment.  There are strong lobby efforts by merchant associations and according to House Judiciary Committee Chairman John Conyers Jr. (D-Mich.), for each consumer payment card purchase--at the mall, at the grocery store, at a gas station or on the Internet--the merchant is charged a fee and these fees are ultimately passed on to all consumers in the form of higher prices for goods and services.

    The concept that Conyers exposes is that of embedded costs which are hidden but are ultimately borne by the consumer. 

    What’s crazy to me is that while so many seem to get this concept in the context … more

  • Vantage Points adds Reward Partners

    Vantage Card Services’ seven year old Vantage Points merchant loyalty rewards program is pleased to welcome New Vantage Points Rewards Partners just in time for the Holidays!



    Sam's Club





    American Express


    Dell Computer

    Golf Smith

    Jiffy Lube

    Pet Smart

    Harry & David

    and many, many more...

    Vantage Card Services was recently recognized in a leading payment industry trade magazine for it’s Vantage Points merchant rewards program as an example of a customer retention focused organization.     Merchants earn Vantage Points accepting MasterCard, Visa and Discover and redeem their points for rewards from nearly 200 distinguished program partners. 

    This one-of-a-kind program is simple to … more

  • Vantage Wayback


    Have you ever used the Wayback Machine?

    The Wayback Machine allows users to browse through over 150 billion web pages archived from 1996 to just a few months ago. I used it to craft this brief history of Vantage.

    We launched our first web presence as far back as the end of 1997 but the first archive I find is a view from October 1999. That’s a decade ago and just months before the dot-com bubble crash. If I recall, we used Microsoft FrontPage to develop these early versions (we still do all our web development in house today):

    And while our site has grown, our messaging hasn’t really changed. In the first paragraph on the October 2000 home page we begin to push the concept of “Interchange … more

  • Fed to consider National Data Breach Law

    According to a Bank Info Security article, House hearings may start later this year or in early 2010 to address the increasing problem of data breaches. According to the Identity Theft Resource Center report, 407 breaches and nearly 220.6 million records have been exposed so far in 2009.

    The current environment seems to be more government regulation on things than less. The purpose of hearings is to discuss the way data is retrieved, transmitted, intercepted and stored and to see how government can regulate aspects of IT -- including companies involved in finance, health, welfare and safety.

    However, before the federal government tries to regulate how the private sector handles and stores data, Congress should consider updating the 7-year-old Federal Information Security Management Act … more

  • Visa moving to chip and PIN in Australia

    Visa Australia announced it was moving to chip and PIN technology for all of its credit cards, with signature transactions to be banned by April 2013.

    Visa's move to kill signature-based mag-stripe transactions by 2013 will require financial institutions and retailers to upgrade over 14 million visa cards, half a million point of sale terminals, and thousands of ATMs.

    While fraud in Australia remains low by world standards, this aggressive rollout of new technologies will strengthen security reducing counterfeit, skimming and online card fraud. 

    Is the U.S. next? more

by Ty Hardison

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