We prepared the following analysis before the Durbin amendment became effective on October 1, 2011.  We will be updating this analysis in the near future but the general guidelines presented are still very valid.

Reducing your healthcare organization’s cost of processing credit and debit card payments from patients or businesses can be a herculean task because the payments industry is unnecessarily complex and confusing. There are so many industry terms—such as qualification tiers, downgrades, interchange, assessments fee, batch fee, automated clearinghouse fee, authorization fee, settlement fee, address verification service fee, and payment card industry compliance fee—that even a sophisticated healthcare finance leader can get cross-eyed.

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ISO stands for Independent Sales Organization and it is a term used by Visa. MSP stands for Merchant Service Provider and it is a term used by MasterCard. ISO and MSP mean exactly the same thing – a company sponsored by a member bank to resell credit/debit card processing services. Becoming an ISO/MSP requires a business to go through a registration process and pay a fee (usually $10,000). One can easily verify an ISO/MSP by checking a company’s website or any of their marketing material for a disclosure “company is a registered ISO/MSP of bank, town, state. FDIC insured”. This disclosure is required by both Visa and MasterCard and will cause a fine of up to $25,000 if it is not clearly visible. Continue Reading»

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Good article on steering consumers to less costly debit cards from Internet Retailer…

The ink is barely dry on the Federal Reserve Board’s June 29 ruling ordering a cut in debit fees, but already about one in six retailers are planning to steer online shoppers to use debit cards, according to the newest Internet Retailer survey. 17% of the 112 respondents to the survey on payment strategy said they planned to take such steps as offering discounts and more prominently displaying debit card options on e-commerce sites. Continue Reading»

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Last fall, Visa and MasterCard announced a settlement with the Department of Justice (DOJ) and several state attorneys general to resolve antitrust investigations into the card networks merchant acceptance rules in the United States. American Express is litigating this suit with the DOJ. On July 20, 2011, the court approved the settlement and entered final judgment in the case. The final judgment is available at www.justice.gov/atr/cases/f273100/273170.pdf. Continue Reading»

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Here is an informative article on developing a payments innovation strategy.

Laying The Foundation For Innovation In Payments

Written by Andrew Morris, CEO, Morris Advisors and Anand Goel, CEO, Optimized Payments Consulting, Inc

And so you’re a retailer looking for new ways to reduce operational costs, improve the shopping experience, enhance customer loyalty, and ultimately increase sales.  At the heart of all of these objectives is a payment transaction  – and the retail world is buzzing as never before with the promise of new technologies that will revolutionize the way consumers make payments.

Isis, Google, PayPal, Square and many other companies have introduced new payment technologies in just the past few years.  For retailers, the complexity and pace of change can be daunting.  After all, retailers are already faced with a dizzying array of payment options to manage and each with its own unique value proposition, risk profile, and cost/benefits to carefully consider.  And now we add a tidal wave of innovation to the mix.  Continue reading…

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About four years ago, Discover and American Express started updating their business model by letting acquirers add its cards to the payment options they offer to merchants.  Traditionally, acquirers or payment processors could only offer Visa and MasterCard processing, and merchants had separate agreements with Discover and AmEx.   Therefore, merchants became accustomed to getting three sets of merchant statements, with three difference customer service phone numbers, and three different funding time frames. Continue Reading»

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In slightly more than a decade convenience fees on credit and debit cards have evolved from application in a specific market to wide adoption across many industries.  This article looks at the growth in usage of convenience fees, application within specific verticals, and card network regulations. Continue Reading»

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Today the Federal Reserve Board issued final rules of the Durbin Amendment, part of the Dodd-Frank Act signed into law in July 2010 by President Obama.  The Durbin Amendment gave authority to the Federal Reserve to regulate debit (signature, PIN, and PINless) interchange fees and transaction routing.

The Fed presented draft rules on December 16, 2010, where they had two alternative approaches  to capping debit interchange fees and two alternative approaches to transaction routing.  After considering over 11,000 comments from consumers, lawmakers, academics, and industry personnel over the last six months, the Fed presented the following rules.  Here are the salient points and dates.  Click here to read the full text of the final rules or a shorter memo of the final rules. Continue Reading»

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Interesting article in the Wall Street Journal that talks about how merchants are leveraging rules for the Durbin Amendment.  Some merchants are offering discounts for paying with cash and setting minimums for card use.  A typical merchant can expect to save about 66% in fees with debit card transactions with the passage of the Durbin Amendment.

Merchants Shred Costs of Payments by Plastic

By Robin Sidel

Merchants are racing to lower their costs when customers pay with plastic.  While a new federal law will shrink debit-card fees charged to merchants starting in July, some are cracking down on how much cash customers can get back at the counter.  Continue reading…

Stay tuned to learn the final rules on debit card transaction rule fees. The Live Webcast is set for Wednesday, June 29, 2011 at 3:30pm EDT.  To learn more, visit the Federal Reserve’s website: www.federalreserve.gov

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There is no business reason for this increase (increased risk, increased costs, etc.) other than fatter profits for MC.  If there was a business rationale for this assessment increase, MC hasn’t articulated it.  This further speaks to government regulation…

Effective April 18, 2011, MasterCard will be increasing the MasterCard assessment fee which MasterCard refers to as the Acquirer Brand Volume Fee (ABVF). The current 0.11% fee will increase by 0.01% to 0.12% on Consumer and Commercial credit volume for transactions of $1,000 or more (gross dollar volume). Clients that are currently charged for MasterCard assessments will incur this incremental increase.

Please note: This fee does not apply to Signature Debit transactions and credit transactions less than $1,000 will continue to be charged the current 0.11% fee.

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