Vantage ViewPoint

Fed will appeal debit fee ruling

Ty Hardison — Mon, 26 Aug 2013 03:45:00 -1200

As we’ve discussed, a recent court ruling on the debit card fee caps set by the Federal Reserve under the Durbin Amendment were found to be invalid. The Fed was ordered to start over. But before rewriting the debit card Interchange rules it originally issued in 2011, which would be a lengthy and disruptive process, the Fed has announced that it will appeal to a higher court.

The Fed said it would pursue an expedited appeal in order to speed up resolution but if the judge lifts his stay on the decision to invalidate the current rules it would result in having no fee caps on debit-card transactions in place. Both banks and merchants have urged the Judge for the stay to continue until the appeal process concludes and new rules can be drafted.

Debit card fees forced lower, what does this mean for small businesses?

Ty Hardison — Mon, 19 Aug 2013 05:01:00 -1200

On July 31st, the Federal Reserve's rule on debit card fees charged to merchants when cardholders use either a signature debit (check card) or a PIN debit card was overturned. Stating the rate caps initially set under the Durbin Amendment were too high, a U.S. District Judge ordered the Fed to lower the Interchange fees on debit cards further. In his ruling, the Judge said that the Fed was only allowed to consider the incremental cost of processing each individual transaction and not the fixed costs like equipment or other costs like fraud prevention. This leaves the Fed to recalculate the incremental cost of processing a debit transaction for the entire industry. Many experts are predicting a return to the initialing proposed 7 cents to 12 cents per transaction level.

While the Fed has 60 days to appeal his ruling, the Judge has given them until August 21st to decide how much time will be needed to rewrite the rules, pushing them for a final interim rule to be in place by the end of the month.

The pressure is on to change from merchant Interchange to cardholder fees.

A 2013 Debit Issuer Study conducted prior to the Judge’s ruling suggests that both regulated and exempt banks were fundamentally changing their debit businesses in response to the early 2011 reduction in Interchange revenue. The study found the most common adjustment was product and pricing structures on checking accounts, directing customers to bank accounts that generated more revenue, have higher minimum balances or have lower costs. The expected impact of more severe caps on debit fees will likely be that more banks will look at fees for debit card use, reducing debit card benefits and placing greater fraud controls by limiting debit card transaction size, frequency and restricting where the card can be used.

While bank customers have grown accustomed to getting many products for free, one of the central arguments on debit pricing is who should pay for the service. Many argue that charging cardholders to use their card is a more efficient way to set market prices. For example, Canada has zero Interchange fees on its single national debit card network and consumers there either maintain $1,000 minimum balance or pay for debit card privileges.

Many believe that banks will look to creatively work around caps, steering consumers to credit and prepaid cards which are not subject to government price controls. Using mobile devices to make payments at the POS could help issuers shift consumers to select charge instead of debit products through the use of incentives and liability protections (and using automated bill pay to make credit transactions look like debit transactions to the cardholder).

Greater network routing rules pose significant operational consequences.

In a 58-page ruling, the Judge also ordered that the Fed rewrite its network routing rules requiring merchants to be presented with multiple unaffiliated PIN debit networks and multiple unaffiliated signature debit networks for each transaction. The current Fed ruling allows for a debit card to be limited to one network choice for signature transactions and one network choice for PIN transactions. This change will mean that each bank issuer will need to put in place agreements that support competing systems with multiple debit networks in order to process a single debit card transaction, effectively increasing the costs of providing debit services while at the same time being restricted by price controls that don’t fully cover all the incremental costs of delivering cardholder services. The debit networks themselves are already changing there pricing approach to the market as a result. Star, Jeanie and Pulse PIN debit networks have all announced a new $6.00 annual merchant participation fee, regardless of the number of transactions you route to them.

After years of planning to roll out more secure and globally accepted EMV chip card payments to replace legacy mag-stripe card technology in the U.S., the big question now is how to support EMV while also adhering to more complex merchant routing choice obligations imposed by the Judge’s ruling.

EMV chips are better suited than mag-stripe cards to handle routing instructions delivering transactions to a merchant’s network choice, but implementing a common standard that all the competing payment parties can agree on won’t happen overnight. EMV will require merchants to upgrade their POS systems and the 2015 liability shift of moving fraud losses to merchants who do not support EMV chip acceptance, designed to encourage merchant adoption, may be delayed as the operational hurdles of more routing options gets resolved.

What does all this mean for small businesses?

What continues to be lost in this ongoing story is if merchants are getting the Fed regulated debit savings. Square and similar flat rate pricing plans along with many of your largest brand name banks and processors don’t pass Fed regulated pricing on to all merchants (or only pass a portion of the savings), thus keeping the difference for themselves. Processors and merchant service providers are not required to pass on the lower Fed regulated debit Interchange rates – and because of this, most small businesses are still, two years later, not realizing the benefits of this legislation.

We’ve been preaching the concept of “Interchange qualification management” for 14 years now. And we’ve posted many articles discussing what steps merchants should take to ensure they see the benefits from lower debit Interchange.

Senate Adopts Amendment to Regulate Interchange; What should merchants do now?
What should merchants do now that the Senate has adopted an amendment to regulate Interchange rates and fees?

Interchange pricing is the key to merchant savings
Check your October 2011 statement to see if you are getting the Fed regulated debit rates.

Small Businesses are Missing Out on Debit Interchange Savings
The only way a business can be sure you are getting ALL of the savings passed through is through the Interchange pass through pricing model.

All merchants who are not on an Interchange pass through billing plan should take action now to renegotiate their pricing arrangements. Merchants should also continue to reterminalize their businesses as needed, particularly moving off dial up terminal communication methods. However, use caution when it comes to any pressure to replace units solely to support EMV. Tablet POS solutions might be a better upgrade investment at this point while waiting for the dust to settle on how new debit network routing rules will be implemented within EMV.

Who will claim their share of the Visa MasterCard multibillion dollar settlement?

admin — Wed, 10 Jul 2013 10:12:12 -1200

What is being billed as the largest antitrust settlement ever at $7.25 Billion, The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation settlement received preliminary court approval back in November 2012. All merchants in the class action suit were notified that they had until May 28th to opt out. With this deadline behind us and only about 7,000 merchants out of more than 7 million merchant class members formally opting out, final court approval is exceedingly likely.

Many of the merchants that did opt out were very large merchants like Amazon.com, 7-Eleven, CVS Pharmacy Inc., Target Corp., Macy’s Inc. and Wal-Mart Stores Inc. who opted out over concerns that the settlement gave Visa and MasterCard too much freedom to raise rates in the future. In choosing to opt out these merchants gave up their rights to claim their part of the $7.2 billion settlement and instead have filed additional legal suits continuing their ongoing battle with the card companies over Interchange fees. Visa has since filed their own legal action asking the court to rule that the card companies’ fee practices are not illegal in an attempt to prevent “the continuation of endless, wasteful litigation.”

For the rest of us who didn't do anything to opt out by the May deadline, we are in the merchant class and ready for the next step. A hearing on final approval is set for Sept 12, 2013. After that it is expected that official claim notices will be mailed to all eligible merchants. The settlement will create two funds. The first is the Cash Fund which is estimated at $6 Billion (net of attorney and admin fees) to pay claims based on Visa and MasterCard Interchange fee volume between 2004 and 2012. The second is the Interchange Fund at $1.1 Billion (net of attorney and admin fees) to pay claims based on Visa and MasterCard sales volume July 2013 to March 2014. It is unclear at this time whether there will be a single claim process for both funds or if they will be run separately.

What has become clear is that most merchants will benefit from expert assistance to file a claim in order to be compensated from the available funds. It is unknown if the claim process will provide merchants with a settlement amount but what has been documented is that given the lack of data available this estimate (if provided) is likely to be about 50% less than what merchants could get by filing through a recovery firm with access to your actual processing history. The added clout of the recovery firm with the settlement administrator will provide for greater negotiation power for maximizing claim value. It is further estimated that as many as 80% of merchants will not file a claim without help. It’s a complex 27-page court document outlining a process that must be performed accurately or the claim will be disqualified. Given the fund pay out is based on the actual number of claims, merchants that do file are likely to recover a greater share of the fund. As your merchant advocate, don’t worry, we’ve go you covered. For actively processing Vantage merchants, we have partnered with Managed Care Advisory Group, LLC (MCAG) who is a leading class action settlement expert providing services to more than 3 million merchants and with a proven track record of increased recoveries.

Vantage clients will find a great deal of value in optimizing their claim and removing the administrative burdens of filing a claim with this service. We will be providing all necessary historical data to MCAG in batch format for them to perform data analysis and complete and file all required documentation on behalf of all our merchants. MCAG are experts and will be set up to handle all merchant inquiries by phone and website throughout the entire process. Our clients will also be able to add previous processor merchant accounts using this service to further simplify the claim process and insuring maximum recovery. Vantage will be sending emails to all clients and publishing statement messages with more information on participating in this value added service over the coming weeks and months. As always, please contact us with any questions or email us at support@vantagecard.com.

hybris Partners with VantageB2B to Enable Online Purchasing for B2B and B2G Businesses

Ty Hardison — Mon, 08 Apr 2013 11:23:00 -1200

Level 3 card processing, provided by VantageB2B, lowers card interchange expenses for commercial purchasing and government card payments.

Chicago, IL (PRWEB) April 04, 2013

hybris, the world’s fastest-growing commerce platform provider ranked “leader” by principal global analyst firms, today announced that it has partnered with VantageB2B, Business Payment Solutions from Vantage Card Services, to enhance the commercial payment processing capabilities of its highly flexible and scalable hybris B2B Commerce solution. The partnership allows B2B organizations to take advantage of commercial payment best practices, lower their related processing expenses and make payment processing more secure.

“B2B eCommerce is being transformed by the use of commercial card products that are being used for corporate, business and GSA (government) purchasing,” said Ty Hardison, vice president strategy & development at Vantage Card Services. “To take advantage of these new payment methods, merchants must implement payment solutions that meet the more complex requirements of Level 3 which these card products leverage. In addition, to handle the specific processing requirements of these commercial p-cards securely, and at the lowest possible cost, requires a business payment processing platform that is uniquely different from that used by consumer payment solutions.”

Level 3 uses data that is additional information about a transaction which is commonly found on an invoice, such as product/service descriptions, quantities and other details. Level 3 processing refers to the process of passing the line item detail from the invoice when submitting the sale transaction for settlement. By providing its customers with Level 3 data for qualifying transactions, hybris will now enable B2B and B2G (business-to-government) organizations to lower their card interchange expenses for commercial purchasing and government card payments. Using VantageB2B’s tokenization system architecture eliminates the risk of exposing customers’ sensitive data while making it faster, easier and less expensive for them to meet quarterly and/or annual PCI compliance requirements.

“As a result of vendors increasing the functionality of their e-commerce platforms to handle more complex B2B product information, contract management and pricing rules, companies in B2B eCommerce are pushing the purchase finalization process online as well,” said Pat Finn, vice president of channels, Americas, at hybris. “Our partnership with VantageB2B perfectly marries their expertise, best practices and specialized tools to deliver Level 3 card payments with the industry’s most modern B2B commerce solution from hybris to help support this business requirement.”

hybris’ new Level 3 capability is available through its hybris Extend program and is ready for immediate use.

To learn more about hybris and Level 3 processing, or request information on the service, go to http://www.hybris.com/product/hybris-extend/vantage.

About hybris
hybris helps businesses on every continent sell more goods, services and digital content through every touchpoint, channel and device. hybris delivers "OmniCommerce™": state-of-the-art master data management and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris' omni-channel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a “leader” and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M as well as consumer brands Toys“R”Us, Metro, Bridgestone, P&G, Levi's, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris has operations in 15 countries around the globe. hybris is the future of commerce™. For more information, visit http://www.hybris.com.

About VantageB2B
VantageB2B provides Level 3 purchasing card and GSA payment processing; API integrations to ecommerce and ERP platforms; and tokenization data security solutions. Vantage supports B2B and B2G clients with guidance on payment acceptance policies, strategies and best practices to lower cost, increase productivity and enhanced security. For more information, visit http://www.VantageB2B.com or call Ty Hardison at 800-397-2380 x14.

For the original version on PRWeb visit:
http://www.prweb.com/releases/prweb2013/4/prweb10601086.htm

Most Merchants Unlikely to Surcharge Credit Card Sales

Ty Hardison — Wed, 30 Jan 2013 09:26:00 -1200

Effective January 27, 2013 merchants in the U.S. region and U.S. territories have the option of adding a surcharge to Visa and MasterCard credit cards. Yet despite the media hype over these recent changes allowing merchants to charge up to a 4% surcharge on credit card transactions, the reality is few merchants are expected to implement additional fees at the point of sale.

Most merchants will likely take a wait and see approach before contemplating adding surcharges, letting their closest competitors try it first.

Another issue is that new application software to support surcharges has not yet been widely developed. One of the many stipulations if a merchant chooses to implement surcharge fees is that they must use a payment application which supports the following mandated POS functionality:

POS application must capture the Surcharge Fee separately from the Purchase (Sale) Amount within the request message to the Host (Processor).
POS application receipts (merchant and cardholder copies) must print both the Sale (Purchase) Amount and the Surcharge Amount (Fee).

The processor host must develop, support and publish technical specs to terminal manufacturers, POS and payment gateway providers who must then update their payment solutions. Given EMV requirements are already consuming development resources, meeting these additional surcharge functionality requirements is going to take time and will likely be rolled into EMV development efforts.

Merchants must also adhere to these additional requirements:

Merchants must first notify Visa, MasterCard and their Acquirer of their intent to surcharge at least 30 days prior to implementing surcharging. You may notify Vantage by emailing us at support@vantagecard.com. Merchants should submit notifications to Visa at www.visa.com/merchantsurcharging and to MasterCard at www.mastercardmerchant.com.
Surcharge fees must not be more than the merchant’s effective discount rate. To meet this requirement, merchants will need to calculate their average effective real rate for the preceding one to twelve months with the maximum surcharge cap being 4%. Vantage clients can use PayView to look up their effective real rate.
Implement surcharges in a manner which ensures a level playing field amongst all general purpose credit cards (Visa, MasterCard, Discover and American Express). To further clarify, a merchant cannot have surcharge fees on Visa and MasterCard but no fee for American Express or Discover transactions – the surcharge fee must be the same for each Brand accepted by the Merchant. Additionally, PayPal currently does not allow surcharges. If the merchant accepts the PayPal Brand, they cannot implement surcharges on any of the other card Brands.
Surcharge rules only apply to credit. Merchants are NOT allowed to surcharge on Debit (Signature or PIN) or Pre-paid cards.
Display notification to its cardholders at the Point-Of-Sale (POS) or Point of Interaction (POI) (a.k.a. POS signage). POS signage must be displayed at the register/checkout for store fronts, and via the payment acceptance web page for electronic commerce merchants. See Sample Surcharge Disclosure.

If merchant chooses to surcharge, they must clearly disclose to their customers at the point of store entry or at the point of interaction (sale) and the dollar amount of the surcharge on the transaction receipt. The surcharge amount must be electronically printed on the cardholder’s receipt in order to allow the entire transaction (surcharge and amount of goods or services) amount to be submitted in the authorization and clearing records.

Merchants must continue to comply with all applicable state laws that prohibit surcharging and state/federal laws regarding deceptive or misleading disclosures. Keep in mind that the states prohibiting surcharging for credit cards include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.
Must return original purchase - surcharge fee when a Refund (Return) is conducted.
Government and education merchant categories have additional surcharge rules including Visa registration and service fee descriptor requirements.

Merchants can review additional information about surcharging credit cards at www.visa.com/merchantsurcharging and www.mastercardmerchant.com.

Visa MasterCard Change Surcharging Rules

Ty Hardison — Mon, 31 Dec 2012 03:30:00 -1200

As part of the Merchant Class Action Litigation Settlement, Visa and MasterCard will make changes to their merchant acceptance practices.

Visa and MasterCard will change their rules effective January 27, 2013 pertaining to the surcharging of credit transactions at the point of sale. Please review the detailed communications on surcharging in their entirety at www.mastercardmerchant.com and www.visa.com/merchantsurcharging.

In summary, and subject to any limitations identified on the above websites or in the upcoming rules changes, U.S. merchants may surcharge Visa and MasterCard credit card transactions (not debit or pre-paid card transactions) at the brand level or the product level, but not both, with the following conditions: (1) surcharges cannot exceed certain levels (generally the gross merchant discount rate also known as myrealrate); (2) merchants that accept cards of other payment network brands (i.e., American Express, Discover) are subject to competitive “level playing field” limitations; and (3) merchants must satisfy notification and disclosure requirements to both the payment card network and the merchant’s acquirer at least 30 days prior to surcharging. In addition, a U.S. merchant that surcharges must provide clear disclosure to the merchant’s customers at the point of interaction.

For additional information including a list of the states that prohibit surcharging, please visit: http://blog.vantagecard.com/post/Payment-Card-Usage-Surcharges.aspx.

Visa, MasterCard Settlement Order Appeal Rejected

Ty Hardison — Tue, 11 Dec 2012 15:28:00 -1200

Upon preliminary approval of the largest antitrust settlement ever at $7.25 Billion, the end is nearing for the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation battle now in its seventh year. But some large retailers oppose the deal claiming they are being forced to forfeit their rights to sue over the card companies’ practices in the future. Filing their concerns in a federal appeals court to challenge the preliminary approval, a decision allowing plaintiffs to begin signing up more than 7 million eligible merchants, the court decided to defer the matter until after final judgment in the case had been issued, a decision expect late in 2013.

Swipe-Fee Settlement Wins Preliminary Approval

Ty Hardison — Wed, 14 Nov 2012 02:10:00 -1200

As expected, the federal judge has now granted preliminary approval of a $7.25 billion class-action settlement in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case saying opponent’s arguments were not persuasive enough to derail the deal.

Calling opponent’s concerns voiced so far "overstated", the U.S. District Court Judge did note the bar for preliminary approval is significantly lower than for final approval, a decision not expected until next year.

Under the settlement, millions of merchants would receive payments totaling $6.05 billion. Those merchants on direct Interchange pass through pricing will also see a temporarily reduced swipe fee by an amount equal to $1.2 billion. And merchants in states that don’t prohibit by law will be able to charge extra fees to customers who pay with credit cards.

The judge’s preliminary approval decision allows plaintiffs to begin signing up more than 7 million retailers that might be eligible to participate in the settlement. It also means rule changes, including the ability to impose surcharges on customers who use card payments, are set to take effect in 60 days.

Yet all this could become void if final approval isn’t granted. Everyone following the case expects that opposition to the settlement will grow louder as the final approval date draws closer. Ever since the proposed settlement was announced some big box retailers and national trade associations have come out against the deal arguing that it grants overly broad releases to Visa and MasterCard.

Some have noted that the big box retailers that opposed the settlement are doing so because they are starting a competing payment network called the Merchant Customer Exchange. American Express has voiced similar concerns saying they worry the settlement would hinder their ability to bring antitrust claims against MasterCard and Visa in the future.

However, not all large merchants and trade groups are against the deal. Plaintiffs in favor of the settlement said the objectors are misinformed or have other agendas. Attorneys who negotiated the deal on behalf of merchants defended the settlement, arguing that it includes substantial reforms for merchants that will put downward pressure on Interchange rates. While still other large merchants including Kroger Co., Walgreen Co. and Safeway Inc., have struck their own deals to settle with the card companies already.

Hurricane Sandy reminds small businesses importance of disaster preparedness planning

Ty Hardison — Mon, 29 Oct 2012 13:05:00 -1200

With Hurricane Sandy bearing down across the east coast, small businesses are reminded of the importance of disaster preparedness planning. And direct deposit paycards are an important part of any such plan.

Both local and non-local emergencies can make receiving pay on payday difficult if not impossible for workers who aren't on direct deposit. When natural disasters occur in a hub city from which paychecks are mailed or air traffic is grounded, employees can not receive paper pay checks in a timely manner.

Yet according to a recent NACHA study, small businesses account for nearly 50 percent paper checks written in the U.S., not including government checks. Research suggest that many of the paper checks written in the US are small B2B payments but 12 percent are for small business payroll with two-thirds of small businesses not offering direct deposit via ACH to their employees.

Small business report that they have not adopted direct deposit for payroll for a variety of reasons including that they feel they too few employees, employees prefer checks, or direct deposit is too expensive. However as any small business that has had to deal with replacing lost checks or fraud from stolen checks knows, the added security of protecting the business routing and account number that comes with direct deposit is highly valued. According to an article in the Minuteman News Center, checks have proven to be a dangerous payment method for quite some time and that in 2010 over 540,000 mailed checks were reported lost or stolen and had to be replaced.

Combining direct deposit with paycards, businesses of all sizes can improve efficiencies, reduce costs, and provide their employees with a convenient, value-added benefit. Direct deposit lowers the costs associated with printing and distribution of paper checks, paper check fraud and escheatment. Paperless pay especially benefits unbanked employees. And Hurricane Sandy reminds us of the need to implement a disaster preparedness plan that includes payroll direct deposit and paycards to help ensure all employees get paid when they need it the most.

IRS Merchant Services Tax Reporting Mandate

Ty Hardison — Thu, 11 Oct 2012 05:45:00 -1200

According to the Housing and Economic Recovery Act of 2008, beginning on January 1, 2012, Acquirers in the electronic payments industry were required to report credit card payments to the IRS.

In addition, Acquirers are also responsible for performing backup withholding on any merchants whose information (name and tax ID) does not match IRS records.

All merchants are encouraged to confirm that their merchant services provider has the most current, up to date and accurate TIN information on file. Merchants should consider submitting a copy of their W-9 form or a copy of the SS-4 form as part of the application process or upon any changes to their businesses legal structure that shows exactly how the merchant’s name is filed with the IRS therefore substantially reducing the possibility of a mismatch.

In January 2013, Vantage will facilitate the mailing of 1099-K documents to all its merchant clients. In late 2013, if the IRS reports non-matching records, those merchants will receive a backup withholding notice (a B-Notice). If a merchant does not respond to the B-Notice and request for W-9, their merchant account must be placed on backup withholding.

Vantage a proud sponsor of Small Business Saturday 2012

Ty Hardison — Tue, 09 Oct 2012 07:08:00 -1200

American Express’ Small Business Saturday is scheduled for Saturday, November 24, 2012. Small Business Saturday falls between Black Friday and Cyber Monday and is dedicated to driving sales to small businesses on one of the busiest holiday shopping weekends of the year.

This year, American Express is giving small merchants that accept American Express® Cards free advertising and motivating consumers to make this the biggest day of the year for small business. Be one of the first to know when you can sign up for free ads and get your marketing materials for Small Business Saturday at www.americanexpress.com/ShopSmallMerchant.

Vantage is encouraging all merchants to sign up early and to promote Small Business Saturday. If you don't accept American Express currently, simply contact us and we can activate American Express acceptance on your Vantage merchant account.

Small Business Saturday was established in 2010 as a day to support local businesses that create jobs, boost the economy and preserve neighborhoods around the country. Last year, an estimated 103 million Americans shopped at independently-owned small businesses on Small Business Saturday. 500,000 small businesses downloaded marketing materials and 15,000 businesses signed up for free Facebook advertising. And hundreds of thousands of consumers registered to receive a statement credit when they shopped at a small business on Small Business Saturday.

More information about Small Business Saturday can be found by visiting www.facebook.com/SmallBusinessSaturday.

BankcardTerminals.com showcases new payment technologies

Ty Hardison — Tue, 25 Sep 2012 09:47:00 -1200

Vantage Card Services launches BankcardTerminals [+] as a new merchant service resource focused on the latest payment technology recommendations.

Our passion has always been consulting with clients to help them identify, select and implement payment solutions to best meet their needs. With BankcardTerminals [+] we take the homework and feedback from working with others to showcase the best in class offerings on the market today.

BankcardTerminals.com can help you plan your roadmap to the next generation of payment technology.

Mobile commerce options are plentiful which means there is plenty to consider when making a decision.
Virtual terminals and electronic invoicing solutions are delivered from the cloud providing feature rich solutions but deciding which one can be tricky.
There are lots of terminals on the market but which are “Future Ready” to meet the industry requirements for EMV chip cards and support End-to-End Encryption, NFC, Contactless and more.
Or, is it time to upgrade to a low-cost Android tablet point of sale system? Of all the tablet POS solutions, how will you decide?

At Vantage we are continuously working on improving our programs, technology and service offerings to provide the best value available anywhere in the payment industry. We recommend that merchants take advantage of our research by speaking with a Vantage Payment Advisor about their payment acceptance needs.

Interchange Lawsuit Update

Ty Hardison — Wed, 22 Aug 2012 08:29:00 -1200

In the seven-year old Interchange lawsuit (Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case), a proposed settlement was announced on July 13, 2102, with an October 19, 2012 deadline to formally request approval from the court. If a preliminary approval is given at that time - a notice of the settlement will be sent to about 7 million U.S. merchants who accepted Visa or MasterCard credit cards since 2004. Then the judge overseeing the case must give a final approve before it can be implemented, which is not expected until the second half of 2013.

In the meantime, opposition to the settlement has grown claiming the settlement doesn’t do enough for merchants. Some trade groups have announced plans to fight the settlement in court. Both Target and Wal-Mart released statements criticizing the proposed deal. And recently US Senator Durbin, who led the amendment to the 2010 Dodd-Frank Act to have debit card Interchange regulated by the Federal Reserve, warned that the settlement would damage future legislative reform efforts.

Industry analysts are not surprised by Durbin’s comments or that some retailers object to the settlement yet don’t believe it will mean that the settlement won’t get approved. Many believe that the arguments against the settlement have already been considered in the long negotiations that lead to the proposed deal. Visa told investors that they expected the federal judge to grant preliminary approval to the settlement in the fall.

Will the Visa/MasterCard Interchange Fee Agreement Hold?

Ty Hardison — Tue, 31 Jul 2012 02:51:00 -1200

If the proposed settlement in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case is approved, merchants will receive billions of dollars, a temporary Interchange rate reduction and the ability to surcharge card payment transactions. In return, the agreement releases Visa and MasterCard from future legal claims regarding Interchange, network rules, merchant fees and related issues by merchants.

Both the National Grocers Association and the National Association of Convenience Stores say they will oppose the agreement on the basis that the agreement does not address how Interchange is set or the complexity of Interchange fee schedules. Target and Wal-Mart are not plaintiffs in this case, but have criticized the proposed settlement for similar reasons and because it would grant Visa and MasterCard releases from future legal claims, even by merchants who aren’t part of the settling class.

Over the next few months, the judge will make a decision to approve or reject the proposed settlement. The next step is a “fairness hearing” in Brooklyn federal court. Despite some objections, most analysts don't expect enough merchants will opt out of the settlement deal to derail it. One reason is that without a settlement, it will take many more years and cost a lot more money to take the case all the way to trial. Another may be that the largest retailers have secured a collective bargaining provision to negotiate lower Interchange rates directly with the payment networks. It has been reported that 15 of the top 100 retailers representing 80% of Visa and MasterCard credit-card volume have already agreed to a separate settlement with the card networks. And while merchants give up their right to sue the networks and credit-card issuers over similar issues, lobbying efforts at both the federal and state levels are expected to continue for merchant rate Interchange reductions and simplification.

Payment Card Usage Surcharges

Ty Hardison — Tue, 31 Jul 2012 02:45:00 -1200

In the proposed settlement of the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case, merchants would win the ability to impose surcharges on customers who use card payments.

However, according to analysis of the proposed settlement, the ability to surcharge customers includes numerous restrictions and requirements:

The surcharge amount will be limited by a cap established by Visa and MasterCard and by card type (debit card surcharge allowances to differ from credit card surcharge allowances)
Merchants will be required to notify Visa and MasterCard before surcharging begins.
Merchants post signs notifying customers that they surcharge
Merchants must include the surcharge amount of any fee on receipts
Merchants are not allowing a surcharge on Visa and MasterCard cardholders greater than charges to customers paying with American Express or Discover cards. For practical purposes, since AmEx prohibits surcharging, merchants would be forced to drop this payment choice.

Of course these surcharge rules will not apply in the 10 states that prohibit that practice by state law to protect consumers. The states that prohibit surcharging for credit cards include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. If more merchants implement payment type surcharges at the point of sale, we can expect consumer advocacy groups to push for even more state regulations to prevent what they will frame as gouging consumers with fees.

Then there is the question of how payment surcharge fees will hurt sales. It is argued that surcharging can cause consumers to think twice about their purchase at the checkout counter, reduces the amount of goods and services consumers will buy and lowers the average sale transaction. In highly competitive consumer markets, customers are expected to respond negatively to payment surcharges. Therefore, surcharge fees are expected to be market-driven and seen in environments where consumers have little choice but to pay them.

Merchants have long been able to offer a cash discount, pricing as an additional reward for cash carrying customers, rather than a penalty for those paying with plastic. And recent industry changes already allow merchants greater flexibility to steer their customer's payment choice.

Instead of surcharge fees, today’s best practice for implementing payment steering policies include offering a discount or benefit to encourage your preferred payment method, offer a promotion after the transaction is completed (like a credit on the billing statement or rebate) or use a separate coupon or voucher.