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Visa MasterCard Interchange Fee Settlement

 

If you are a merchant who has accepted Visa or MasterCard at any time between January 1, 2004 and November 28, 2012, you are eligible to receive an interchange fee settlement from the $6B class action lawsuit filed against the card associations.  There is an additional $1.2B interchange fund allocated for merchants accepting Visa and MasterCard from July 29, 2013 through the subsequent eight months. The amount to be distributed to merchants from the interchange fund is 1/10th of 1% of total Visa and MasterCard transaction volume for the eight month period beginning July 29th, 2013. The suit was filed in the state of New York with the claim that Visa and MasterCard conspired to charge excessive fees to merchants accepting their cards.

 

The settlement was recently finalized, and all merchants fitting into the above classification are now eligible to get their payout.  However, not everyone considers this a win for merchants.  To find out why, we can look to the “big guys” who have rejected the settlement (the deadline to do so has passed).  19 of the largest retailers in the U.S. have opted out of the antitrust lawsuit in order to retain their right to bring another suit against Visa and MasterCard at some point in the future, and to prevent the release of future liability of anticompetitive actions on the part of the credit card associations.  The retailers include Walmart, Lowe’s, Costco, Starbucks, Gap Inc., J. Crew, 7-Eleven (Alon), and others.

 

Not only are they opting out because of the future release of liability, but also because they don’t believe the settlement does enough for merchants of any size to help reduce costs of credit card processing, and therefore to help reduce prices for […]

By | 2013-12-23T19:57:21+00:00 December 23rd, 2013|Categories: Blog Post, Uncategorized|Tags: , , , |0 Comments

Is Visa Charging Me For Lack of Integrity?

Is Visa Charging Me For Lack of Integrity?           

Honor, truth, veracity – integrity embodies all of these, but now Integrity also means an extra $0.10 for Visa transactions on debit or prepaid cards that don’t meet certain Custom Payment Service (CPS) qualification criteria.

 

How to Avoid the Fee

There are a few ways to avoid the fee.  For CNP merchants, avoiding them could be a bit trickier than for POS merchants, but here are the basic guidelines:

  • Always authorize and settle for the same amount
  • Always obtain an exact AVS match – in some cases, requiring an exact match can erode overall conversion and lifetime value to the point that it’s not worth saving the $0.10 fee, so this would need to be evaluated on a merchant by merchant basis, or perhaps by affiliate or other marketing channel
  • Ensure your processor is submitting the correct indicators and MCC with your transactions

 

Again, it’s important to remember that this fee only applies to debit or prepaid cards, regulated or non-regulated.  Each merchant’s file will be different and best practices may need to be tweaked by merchant, transactional division, source of orders, product line, BIN, or more.  For questions on how to best implement this for your specific business, contact us.

By | 2013-11-26T15:21:21+00:00 November 26th, 2013|Categories: Blog Post|Tags: , , , |0 Comments

Increases to Visa and MasterCard Processing Fees Beginning October 2013

Visa and MasterCard have just announced additional processing fees that will impact all merchants beginning with transactions processed as of October 1, 2013.  The fees will add $0.0025 for each settled transaction for both Visa and MasterCard.  For Visa, this is known as the Base II Fee and MasterCard refers to it as the Settlement Fee.  In addition to these settlement fees, Visa will be tacking on $1.00 image document fee, assessed when disputing a chargeback, while MasterCard is adding $0.45 per chargeback support document.

The impact of the settlement fees will essentially be to add $2.50 per 1,000 transactions settled.  The additional chargeback fees will impact the representment process, but will not have any impact on chargebacks that are not being represented.  Depending on price point and success rates, it could make representing chargebacks less lucrative for some merchants.  Those with high price points and good success in disputing chargebacks will likely still want to continue.

If you have any questions about how this will impact your specific business, please reach out to your main contact at PLC, or contact us at info@paullarsenconsulting.com.