Analysis
Archived posts from this Category
Visa to Support Two Tier Debit Interchange Structure
Posted by anandkgoel on 24 Jan 2011 | Tagged as: Analysis, General
Two weeks ago, Visa announced that it will support a two-tier debit interchange structure – the current debit interchange rates for issuers with assets less than $10 billion and the new capped debit rates being developed by the Federal Reserve for larger issuers.  Read more about this here.
“MasterCard is continuing to evaluate the viability of a two-tier interchange structure…” read a statement from MasterCard. It is likely that MasterCard will follow Visa or otherwise, risk being less competitive to smaller financial institutions.
Lastly, if you didn’t get a chance to see the Federal Reserve hearing proposing new rules in regulating debit interchange fees and routing, check here to see an archive on C-Span. It is very interesting to hear the Fed’s perspective on our industry, particularly in the Q&A session.
Finding the “Best” Acquirer
Posted by anandkgoel on 11 Jan 2011 | Tagged as: Analysis, Education, General
A common and frequent question we get asked is, “who is the best credit card processor?” I usually smile because it is like asking a frequently flyer which airline is the best. There are travelers who have horror stories about each and every airline, at least amongst domestic carriers. Similarly, we have not found a single best credit card processor, or merchant acquirer, that addresses every need in the marketplace. Tier one firms typically offer similar levels of service, competitive pricing, and technology. Few distinctions amongst acquirers can be based on their product/service functionality (online chargeback management, electronic signature capture, configurable reporting, etc.) and certification to various gateways and point-of-sale systems. So determining the best processor really depends on a merchant’s needs. Continue Reading»
Understanding Fed’s Proposed Rules on Debit Interchange Fees & Routing
Posted by anandkgoel on 07 Jan 2011 | Tagged as: Analysis, Education, General, Published Articles
Merchants finally received a long awaited holiday present last month in the form of proposed rules regulating debit interchange fees. The Federal Reserve proposed new rules on December 16th, 2010, to govern debit interchange fees and network routing. These proposed rules are subject to a 60-day comment period, and the Fed is scheduled to issue a final version by April 21, 2011, with the rules going into effect June 21, 2011. As background, the Federal Reserve was empowered to implement the Durbin Amendment, a provision of the Dodd-Frank Wall Street Reform Act of 2010 signed into law in July 2010 that regulates debit interchange fees and network routing.
The salient points of the Fed proposed rules that pertain to most merchants along with our analysis are as follows: Continue Reading»
A Case For Regulating Debit Card Fees
Posted by anandkgoel on 17 May 2010 | Tagged as: Analysis, Education, General
An amendment sponsored by Senator Dick Durbin to tackle “swipe fees” passed last Thursday in a 64-33 vote. This amendment focuses on how much Interchange fees issuing banks can charge merchants for accepting debit cards. Although this amendment still has to go through several hurdles Continue Reading»
2010 Spring Interchange Updates (Increases) are Here
Posted by srini on 13 Mar 2010 | Tagged as: Analysis, Education, General
Visa, MasterCard, and the PIN debit networks are starting to release their annual Spring interchange and dues updates. For the most part, the updates reflect interchange increases that will be passed on to merchants, and will drive up the overall effective cost of electronic payments.
Visa has taken a major step by pricing a Visa signature debit card (check card) transaction the same as a Visa Interlink PIN debit transaction, both at 0.95% + $0.20 plus assessment or switch fee, respectively. Other PIN debit networks are also increasing their interchange rates or eliminating the cap on interchange fees, and thus, are slowly eroding the cost differential between signature and PIN debit transactions. Star was the last major debit network to remove its cap on interchange fees. Â Continue Reading»
GAO Releases Interchange Report
Posted by anandkgoel on 24 Nov 2009 | Tagged as: Analysis, Education, General
Last week, the Government Accountability Office (GAO) released its report on interchange as required by the CARD Act that was enacted earlier this year. Read the full report here. Continue Reading»
Card Fees Pit Retailers Against Banks
Posted by anandkgoel on 17 Jul 2009 | Tagged as: Analysis, General
Here’s a good article from the New York Times titled, “Card Fees Pit Retailers Against Banks“. The article was published two days ago and it summarizes the latest efforts by retailers to lobby for interchange reform.
It is true that legislation could regulate and thus, reduce Interchange costs. However, regulatory action is very untenable and could take years. The banks will be very aggressive in fighting any sort of regulation, having just lost their battle with consumers in the way of Credit Card Accountability Responsibility & Disclosure Act. Moreover, lawmakers will be a bit more reticent in implementing additional bank regulations that further stresses bank profitability, especially after sector weakness and increased regulations from the mortgage meltdown and the CCARD Act.
While there is potential for regulatory relief for merchants, there are a number of things that merchants can do on their own to reduce payment costs. Our Company’s entire business model is centered around helping merchants reduce their payment costs in the current environment.
Impact of Financial Regulations Proposal on Payments
Posted by anandkgoel on 17 Jun 2009 | Tagged as: Analysis, Education, General
President Obama’s sent a draft proposal of new financial regulations to Congress today. This 85-page document outlines sweeping reorganization of financial-markets are supervised since the Great Depression. It will touch almost every facet of banking from “how mortgages are underwritten to the way exotic financial instruments are traded” according to Damian Paletta at the Wall Street Journal. Continue Reading»
Impact of Credit Card Act on Businesses
Posted by anandkgoel on 06 Jun 2009 | Tagged as: Analysis, Education, General, Published Articles
President Barak Obama signed into law on May 22, 2009, the Credit Card Accountability Responsibility & Disclosure Act. This sweeping legislation has significant implications for consumers, banks, and many businesses who issue gift cards.
Understanding and Managing Your Payments Effective Cost
Posted by anandkgoel on 04 May 2009 | Tagged as: Analysis, Education, General, Published Articles
Pricing in the credit card processing industry is very complex and most merchant statements do not make it any easier to understand. There are so many technical and industry laden terms (Interchange, qualification tiers, downgrades, batch fee, ACH fee, authorization fee, settlement fee, AVS fee, PCI compliance fee, etc.) that even a sophisticated financial manager can get cross-eyed. So how do you really understand your true cost of credit/debit card processing, and then use that knowledge to ensure that your company is getting the best value for merchant services? This article will help you understand and manage the effective cost of different payment cards. Continue Reading»
