2012 Visa MasterCard & Discover Industry Updates

Visa Processing Integrity Mandate

• Effective April 12, 2013, Visa will begin rejecting settled transactions that do not include the required transaction ID (TID) and validation code provided in the authorization response message. Today, transactions missing the TID and / or validation code downgrade to higher interchange rate program of
• EIRF /Commercial Standard.

Visa New Transaction Integrity Fee for U.S. Domestic Debit and Prepaid Card Transactions

• Effective April 13, 2012, Visa will implement a “Transaction Integrity Fee” assessed at $0.10 per item. This fee will be added to your account and will be applied to all U.S. issued Visa Debit and Prepaid card transactions that are not Custom Payment Service (CPS) qualified.

Visa Changes to support AFD Transaction Processing for Acquirers

• Effective October 20, 2012, Visa will require automated fuel pump merchants to send an Acquirer Confirmation Advice message within 2 hours after the authorization has been completed showing the amount spent by the cardholder. This allows issuers to release estimated holds against the cardholder’s available credit (open to buy). Failure to submit the Acquirer Confirmation Advice or processing the Acquirer Confirmation Advice in excess of 2 hours will result in non-compliance assessments effective October 20, 2012. Action Required for Automated Fuel Dispenser (AFD) Merchants: Please contact your pump vendor to implement the required changes needed to support the Completion Advice prior to the effective date.

Visa Transaction Amount Edits for B2B Key Entered Transactions

• Effective April 13, 2012, Visa will begin rejecting settled Business-to-Business key entered transactions when the total authorized sale amount and the settled sale amount does not match. To avoid rejects, please ensure that the total authorized amount and the settled transaction amount match. At this time, the edit will be applied to Visa Purchasing, Visa Purchasing Fleet, and Visa GSA Purchasing card types.

Visa Expands Authorization to Settlement Amount Tolerance & Chargeback Protection Limit for Car Rental Merchants

• Effective for transactions processed on or after April 13, 2012, Visa will expand the amount tolerance between the authorized amount and the final settled amount to 15% of the authorized amount or $75.00 (whichever is greater) for car rental merchants. As a result, transactions will not be subject to chargeback reason code 72 “No Authorization” when the proper authorization has been obtained and the amount of the settled transaction including tip does not exceed the amount tolerance.

MasterCard Revised Travel and Entertainment Merchant Standards

• Revised Travel and Entertainment (T&E) Merchant Standards: Effective October 12, 2012, MasterCard will require the inclusion of the “Trace ID” value provided in the original authorization response, be resubmitted in all subsequent authorization requests as well as the final settled sale associated with a single cardholder billing event. This change will eliminate lengthy authorization holds held against the cardholder’s available credit (open to buy) and improve customer service related issues. Action Required for T&E Merchants Processing Incremental Authorization Requests: Please contact your Point of Sale vendor to schedule the necessary software updates to ensure compliance with this mandate before the effective date.

MasterCard Revised Standard for Fraud-Related Chargeback Processing

• Effective April 13, 2012, MasterCard will no longer require a copy of the signed sales draft for face-to-face transactions when the issuer utilized the Expedited Billing Dispute Resolution Process form in lieu of the cardholder letter for chargeback reason code 37 “No Cardholder Authorization”. Currently MasterCard requires a copy of the signed sales draft along with proof of proper authorization to remedy the referenced chargeback reason code. MasterCard will consider proof of valid authorization with full card read as a remedy. As a reminder, please ensure that you respond to all retrieval and dispute requests within the required timeframe.

MasterCard Revisions to U.S. Presentment Standards

• Effective April 13, 2012, MasterCard will revise the settlement time frame for manually (paper) processed transactions from the current 30 calendar days to 14 calendar days from the transaction date for U.S. domestic transactions (U.S. Merchant / U.S. Issued Card). Transactions settled after the specified time frames could be subject to reason code 42 “Late Presentment” if the issuer is unable to post the transaction to the cardholder’s account.

Discover Acquirer Assessment Fee Increase

• Effective April 13, 2012, Discover will increase the U.S. and International Acquirer Assessment fee by 0.005% to an amount of 0.105%. The fee is applied to all U.S. and International Discover settled sales. This increase will appear beginning with your April month-end statement that you will receive in May.

Discover Tolerance Level-Permissible Variation between Card Sale Amount in the Authorization Request and Sales Data

• Effective April 13, 2012, Discover will introduce an amount tolerance of 20% between the authorized amount and the final settled amount for the following MCCs: 4812 (Taxicabs/Limousines), 5812 (Eating Places and Restaurants), 5813 (Drinking Places/Alcoholic Beverages), 5814 (Fast Food Restaurants), 7230 (Beauty/Barber Shops), and 7298 (Health & Beauty Spas). As a result, transactions will not be subject to “No Authorization” disputes when proper authorization has been obtained and the amount of the settled transaction including tip does not exceed the authorized amount by 20%.

Grant Rowlands
National Account Executive
P: (866) 480-2433
C: (215) 421-3333
F: (215) 494-0368

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The Mobile Wallet and the Tap to Pay System

We all have our mobile phones today, and, like our wallets used to do, the phone holds virtually everything we need: pictures, contacts, email, even bank account information. And now smartphones are trying to take one more thing out of that bulky wallet: payment cards. The mobile phone is on the cusp of becoming a mobile wallet, among all its other functions. The only thing you need to be concerned about is that you’ll never be able to use the I-forgot-my-wallet excuse again!

"The Mobile Wallet"

What is a Mobile Wallet?

A mobile wallet is also referred to as a mobile payment. Mobile payments allow you to use your phone to transmit the payment data from you credit card or debit card to the store with just a tap on the processing terminal where you would normally swipe your card.

 

The technology emerged in 2005, piloted by Nokia, and was different from payment via SMS text or through direct billing. This type of mobile wallet or mobile payment allows you to use Near Field Communication (NFC) technology to allow a special device in the smartphone to send waves to a receiver in the merchant’s payment terminal. This receiver gathers the information and transmits it to the computer to read and process it.

 

The technology for mobile payments is already in place and being used by some European countries, although their uses include paying for public parking and public transportation. You may also already use this technology if you have an EZPass for your vehicle on toll roads.

 

The proposed mobile wallets would feed off your bank account or a credit card account, and not off of a cash fund you place on the device. The mobile wallet gained a lot of ground after the initial testing done by Nokia, and now many other phone companies are rolling out smartphones with the capabilities of mobile payments.

 

Research in Motion, Google Android and LG are some of the first to announce that their upcoming phones would be capable of mobile payments using NFC of merchant to consumer transactions and by using debit or credit card information. Additionally, the manufacturers of the payment processing terminals have begun to catch on to the trend, and are now rolling out terminals that have both NFC capabilities, as well as ordinary swipe card technology. 2012 is expected to be an exciting year for mobile wallets and NFC technology system.

 

How does this help me?

 

2012 is the year when merchants should begin to get the system in place for the mobile wallet system. Ensure that your payment processor is capable of handling any changes in payment systems, and that your own terminals are up to date so that if a customer comes in and wants to just tap to pay, you are able to serve that person.

 

Everyone will benefit from this technology, especially after the initial challenges of changing systems. The mobile wallet is infinitely more secure than the credit card for both the consumer and the merchant. The card information stored on the phone can be removed within seconds of the phone being reported lost or stolen. This means less fraudulent purchases for the merchant and less hassle for the consumer. Additionally, the technology ensures security by sometimes requiring a PIN or a password to access the system and also uses waves that are encrypted and generally not readable except from a very short distance.

 

Another example of how this will help both merchants and consumers is that the smartphone has the capability to not only use the credit card information but also any coupons and loyalty card information to efficiently process the transaction giving the consumer the maximum benefit and the merchant the easiest transaction. Then all information can be stored in the computer and merchants can use loyalty card usage and coupon usage information to help them improve sales and customer satisfaction.

 

Finally the advent of NFC technology and its use as a mobile wallet will change the credit card industry and the payment systems industry, with most of the changes being something your providers will need to adjust to quickly. Currently the mobile wallet is “operator-centric,” meaning that the phone company and the consumer operating the phone are in control of the use. The credit card system will not face so many changes; it will merely have to be more prepared for use of wireless and internet transactions. Essentially the mobile wallet removes the need for swipe cards, but not the processing fees associated with it. Credit card companies will need to adjust to this change.

 

How can we help?

 

While you and your customers ponder the use of the mobile wallet, we offer a mobile payment system which may help you adjust to the idea of phones being a method to convey currency. This handy system allows you to turn your smartphone into a payment processing terminal safely and securely. Contact us today to discuss how you can prepare for the new technology and how it may affect your business.

 

When all other players in the system are changing, you can bet that your payment processor will need to change too. My POS Depot is watching this emerging technology and is excited about the changes that are occurring. As a processor we understand that the merchant, and the consumer, and the credit card company are all shifting positions, and the payment system processors will need to be prepared to shift too. As the specific use of this technology emerges and the players begin to take their places, My POS Depot will be adding mobile products and solutions for merchants to help them move forward without interrupting business.

Ensuring Cardholder Information is Secure

myposdepot.com - "THE BEST IN POS"

What is PCI Compliance and How Can It Affect Me?

The twentieth century U.S. criminal Willie Sutton was said to rob banks because “that’s where the money is.” The same motivation in our digital age makes merchants the new target for financial fraud. The lack of security by merchants enables criminals to easily steal and use personal consumer financial information from payment card transactions and processing systems.

It’s a serious problem – more than 510 million records with sensitive information have been breached since January 2005, according to PrivacyRights.org. As a merchant, you are at the center of payment card transactions so it is imperative that you use standard security procedures and technologies to thwart theft of cardholder data.

Merchant-based vulnerabilities may appear almost anywhere in the card-processing ecosystem including point-of-sale devices; personal computers or servers; wireless hotspots or Web shopping applications; in paper-based storage systems; and unsecured transmission of cardholder data to service providers.

A survey of businesses in the U.S. reveals activities that may put cardholder data at risk.*

• 81% store payment card numbers
• 73% store payment card expiration dates
• 71% store payment card verification codes
• 57% store customer data from the payment card magnetic stripe
• 16% store other personal data

Compliance with the Payment Card Industry (PCI) Data Security Standard (DSS) helps to alleviate these vulnerabilities and protect cardholder data.

Payment Card Industry (PCI) Compliance is a complex system put in place by the five major swipe card brands/associations. These are: Visa, MasterCard, American Express, Discover, and JCB. A merchant who accepts one of these brands is subject to PCI Compliance. Any debit, credit, or pre-paid swipe card is subject to the PCI Compliance rules.

The rules for compliance deal with Data Security Standards (PCI DSS). The official site for the Security Standards Council (SSC) which oversees and enforces PCI compliance can be found here. The SSC mandates compliance standards to be in place prior to the transaction. Further compliance deadlines are set at various times. For most small to medium sized businesses, the deadline and enforcement will come from your merchant bank.

For PCI DSS, a merchant is any entity which accepts payments from one of the five brands. A merchant can also be a service provider if the merchant accepts cards for payments of goods or services on behalf of another entity. A service provider is subject to the same rules as a merchant.

Whether you use internet sales transactions or point of sale transactions, you must comply with PCI DSS. Use of even one swipe card in a merchant’s business in a calendar year, places the merchant under PCI DSS. For merchants, use includes: storage, transmission, or processing of cardholder data. The standards for compliance do vary for the number of transactions per year.

Merchants must complete a quarterly scan from a PCI SSC approved scanning vendor. Alpha Card Services is pleased to announce that upon launch of our new PCI Security website portal, where we will be able to help you evaluate and comply with requirements for PCI DSS. This website will also help you to validate your compliance and complete an Attestation of Compliance. Contact one of our helpful representatives to learn more.

The purpose of these standards is to protect cardholder account data, the account number printed on the card. Merchants and any other service provider involved in the transaction process must never store this sensitive data after the authorization. This includes sensitive data printed on the card, or stored on the magnetic strip or chip- and personal information entered by the cardholder. When merchants comply with PCI DSS, it ensures a number of things:

• The cardholders will use their cards knowing their information is secure. This helps you because when consumers know their information is secure, they will want to use their card to purchase your goods or services.
• The merchant will not be subject to fines or sanctions from the SSC.
• The banks the merchant uses will not be directly fined by the SSC (these fines generally are passed down the line until the merchant bears the cost)
• Merchants’ own storage and information is secure from malicious attacks, intrusions, or computer hackers.
• Many states require merchants who have been compromised to reveal the information to the public. Compliance prevents this embarrassment and potential loss of business.

How Do I know my Customers are Protected?

As a merchant you might wonder how you can comply with the standards and also ensure protection of your customer’s information. By utilizing our PCI Security website portal, and other safety measures, you can achieve maximum security of information.

First, Visa has promulgated a list of best practices for merchants. Although it is not all encompassing, it will help small to medium sized businesses protect themselves and their customers. Some of these practices include using a payment systems provider with a good reputation for updating his or her software for processing, not sharing access information for firewalls or secured networks, and not hiring cyber-criminals.

Second, one can avoid some common downfalls. Perhaps the most common is that small businesses with few transactions believe that an SSL Certificate is sufficient to ensure compliance. This is incorrect. Also, some small businesses that are run from homes are particularly targeted by hackers. This means that those who run small businesses should ensure they have a secure network and a good processing center.

Finally, merchants can ensure they have secure payment gateways. A payment gateway is the method through which a merchant is connected to the actual bank. Often these gateways are facilitated by processors, such as MyPOSDepot, and so finding a secure gateway is as simple as finding a good processor.

Dealing with PCI Compliance does not have to be a painful process, and is helpful to both you, the merchant, and to your customers. As we launch our brand new PCI Security portal, you can be assured that we will help you to comply with PCI DSS and that we will be using state-of-the-art software and security systems to ensure that our services to you will not be compromised. As small to medium sized businesses are the most vulnerable to hacking and are targeted by banks for compliance issues, any Level 4 merchant needs to make sure it has a good partner in swipe card processing. Contact one of our representatives for help today.

*Source: Forrester Consulting: The State of PCI Compliance (commissioned by RSA/EMC)

Grant Rowlands
National Account Executive
P: (866) 480-2433
C: (215) 421-3333
F: (215) 494-0368

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PCI compliance checklist-

Grant @ myposdepot

The issue of merchants becoming “PCI Compliant” has raised a lot of questions surrounding what a merchant must do to become compliant in the payment card industry.  Compliance rules and regulations have a lot to do with the type of business a merchant has and how they accept credit cards. Some of the benefits of following the standards set by PCI compliance include the following:

• Being compliant with the PCI DSS demonstrates that your customers’ private information is protected, so they can entrust their credit card payments to you without needing to worry about the security of their data.
• Compliance with PCI DSS enhances your business reputation and is held in high regard by banks and credit card companies — the very same corporations that help you do business and help you to gain customers trust.
• Following the PCI security standards helps you to demonstrate an ongoing commitment to enhance the shopping experience for your customers – and a genuine desire to protect their data by preventing security breaches.

The following 12 components form part of the PCI compliance checklist outlined by the PCI Security Standards Council. This checklist aims to establish and maintain a secure, impenetrable network focusing on security of payment brands users.

• Install and keep updated a firewall between the public network and the payment card data
• Change vendor-supplied passwords that come with network and payment processing equipment
• Protect any customer data stored for business purposes or regulatory purposes
• Encrypt all transmissions of customer data over any public network
• Maintain antivirus software in all of your computers
• Deploy only secure card processing applications and systems
• Limit access to the customer payment data to as few people as possible on the “need-to-know” basis within your business
• Use building entry authentication such as visitor and employees badges with identification to limit access to stored data
• Keep restricted physical access to business computers and customer data
• Regularly test security applications and any PCI security processes that you have in place
• Keep all employees informed about your information security policies

Generally, a merchant will implement what is necessary to ensure these requirements are adhered to. Evaluation of the PCI security processes and the compliance checklist will help to ensure that your business is providing a secure environment and protecting customer data efficiently.

Grant Rowlands
National Account Executive
P: (866) 480-2433

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Are digital receipts and mobile card processing the next evolution of commerce?

Grant @ MyPOSDepot

How often have you waited in line at the local home improvement store for the one clerk to checkout 20 patrons; often with tired, screaming children running through the aisles?  Perhaps you’ve enjoyed a long meal at a Zagat-rated restaurant, and you’ve been waiting for over a ½ hour for your server to process your check.  You know the story; its wait, wait, and wait some more!  Waiting is what we seem to do best these days.  If you’re like me, when you purchase a product or service, you want to get in and out of the retail environment as soon as possible, with no complications at the register.

Recently, an increasing number of retailers and restaurants are offering mobile credit card processing as a solution to alleviate these long checkout queues, as well as enjoy other benefits to the merchant and consumers.  In a nutshell, the merchant utilizes a placement reader or card swiper that attaches directly to a smartphone, such as the iPhone, Android or Blackberry.  A smartphone app downloaded by the merchant provides the technology for credit card processing, digital signatures and electronic receipt transmission to the customer.  The merchant swipes the customer’s card through the placement reader, the card transaction processes in the background, the customer signs the smartphone screen and a receipt is emailed to the customer’s email inbox.

Beyond the obvious convenience factor of reducing retail checkout queues and the efficiency of emailing a receipt directly to a customer email inbox, merchants are starting to tout the other benefits that accompany mobile credit card processing.  Merchants that are migrating towards paperless, digital receipts are finding that expensive to maintain receipt printers are no longer necessary.  This in turn reduces the merchant’s receipt paper and printer ink costs.  With a reduction of paper usage, merchants can now champion the environmentally friendly aspect of paperless receipts in their green marketing campaigns.  Customers also appreciate the green alternative to a crumbled receipt that often gets misplaced.

Cardholder security is a major concern for both merchants and customers alike.  Most mobile processing systems are equipped with rigorous encryption standards that meet or exceed conventional processing terminals.  For example, Alpha Card Service’s QwickPAY mobile processing device surpasses current PCI DSS standards by combining multi-layered MagneSafe™ security, in addition to encrypting card data from the point-of-swipe.  The QwickPAY service enables merchants to use their existing mobile devices to make secure, card present transactions anytime and anywhere, without the concerns of storing sensitive card data.

Smartphone with QwickPAY

QwickPAY digital receipt

For merchants, there are clear opportunities for direct marketing with obtaining the customer’s email address.  Special offers, coupons, newsletters and social media outreach are all possible with this direct relationship with the customer.  However, some privacy advocates have expressed concern that obtaining customer email accounts constitute an intrusion into personal information.  As electronic receipts have been optional for consumers thus far, most of these concerns are unfounded.

As a person who is frequently impatient with long lines and slow checkout staff, I fully embrace this transformation to digital receipts and mobile credit card processing.

Grant Rowlands
National Account Executive
P: (866) 480-2433
C: (215) 421-3333
F: (215) 494-0368

http://www.myposdepot.com

Follow MyPOSDepot & Receive Exclusive Offers!

             

Who are the “players” in the credit card industry?

THE PLAYERS IN THE INDUSTRY

Cardholder (Consumer)

Holds MasterCard or Visa credit card issued by a bank with a line of credit

Card Issuer

(Financial Institution and/or Bank) Licensed member of MasterCard and/or Visa; in which, they issue bank credit cards to consumers and applicants. They receive interchange from every transaction (see interchange chart)

Merchant Acquirer

Solicits screens, accepts and sets up merchants with its bankcard program. It uses front-end networks to authorize credit card transactions and back back-end networks to settle the funds

Merchant

Any business entity that is approved to accept credit cards as a form of payment. If a merchant is approved to accept credit cards they must accept all credit cards, they can’t refuse to take a particular card. A merchant can’t “surcharge” a cardholder paying with a credit card. Also, a merchant can’t require a minimum purchase for accepting credit cards

Member Service Provider

Third party organizations approved and registered with Visa and MasterCard to offer processing Services; also known as Independent Sales Organizations (ISO’s). My POS Depot is a Member Service Provider.

MasterCard & Visa International

Worldwide payment service organization made up of Financial Institutions (banks). They manage the industry, monitor fraud, and set the rules and regulations. They also market their brand to the public

Merchant Level Sales Representative (MLSR)

They market the products and services from a Member Service Provider to merchants allowing the merchants to accept credit cards, debit cards, checks, EBT, gift & Loyalty cards, Cash advance, and ATM services.

http://www.myposdepot.com

 

grant @ myposdepot

growlands@myposdepot.com

http://www.myposdepot.com

Why do credit card processing rates and fees change / differ?

Grant @ myposdepot

growlands@myposdepot.com

Credit card processing fees charged to each individual merchant depend on a few basic variables. To best explain how these rates and fees are determined you must first understand the concept of interchange. Interchange is the rates that each card issuer (Visa, MasterCard & Discover) charge the credit card processor to run each individual sale. Each type of credit card is given an interchange percentage rate and transaction fee and this is always determined by the card issuer. The rates vary because some card types offer incentives, rewards, or some type of promotion to their customer. To make up for this added cost the card issuers charge higher rates to accept these incentive cards.

The card issuer also charges higher rates depending on the risk involved in processing the transaction. For example a merchant who does not physically swipe the card is considered to be processing a less secure transaction because the magnetic strip on the card is not being verified. This is called a CNP or “Card No Present” transaction. These two factors are how the credit card issuing bank determine the interchange rate for each card type. On top of the interchange rate the company who processes your transaction is also going to mark up the rate so they can profit from the transaction.

The markup charged by the card processor can be come in three basic forms or pricing structures.  A flat rate pricing structure is best described as a type of pricing where a single rate and transaction fee are charged no matter what type of transaction the merchant runs. This is the least effective pricing structure because unless the merchant is always processing the same card type, they are being charged rates to cover the cost of the most expensive card types. The flat rate is going to be higher than all interchange rates to assure that the credit card processor covers their cost to process each transaction. This type of pricing is not very popular because the credit card processing industry has so many competitors and it is easy for any individual company to beat.

The interchange markup can also be in the form of tiered pricing. This pricing structure is very common for most retail merchants in the United States. Tiered pricing is based on a set of rates that will be charged to a specific card type. For example four tier pricing has four sets of rates that depending on the type of card the merchant runs will be charged to that specific card type-

TIER 1 – Standard Check / Debit Cards (Cards issued by a bank normally linked to a checking or savings account

TIER 2- Standard Credit Cards – Cards swiped at the point of sale that offering no major incentives to its customers

Tier 3- Manually entered credit cards or cards that offer basic rewards or incentives to its customers

Tier 4- Key entered rewards cards and/or business cards, signature cards, world cards, purchasing cards,  basically this is the majority of your rewards or incentive cards

Each tier has a flat transaction rate and fee that is charged depending on the card type to assure that the card is being charged a higher rate that the interchange rate that the card issuer is charging.

 

The last pricing structure is called interchange plus pricing. As simple as the name is this type of pricing charges the merchant the specific interchange rate that each card is given by the card issuer and a flat markup above the interchange rate which will be profit for the card processor. For example if a Visa Signature card has a rate of 1.6% plus a transaction fee of .10 cents and the merchant is on interchange plus pricing with a markup of .10 percentage or basis points plus a transaction fee of .10 cents the total cost will be 1.7%  plus a transaction fee of .20 cents. This type of pricing is the most cost-effective for the merchant because no matter how many cards they process or what type of cards they are the markup above cost will always be the same. In this case the markup is .10% (basis points) plus .10 cents per transaction. This type of pricing is usually only offered to high volume merchants who have a low average ticket and run a lot of sales for example a restaurant.

Now that you are familiar with the types of pricing and what credit card processing rates and fees consist of here is an overview of the many types of cards that are available to qualified customers:
MasterCard and Visa
Also know as “Bankcards” because a bank issues them. If you look at your credit card, there will be an issue bank on the front or the back of the card (Bank of America, Wells Fargo, Chase, etc.) They are a genuine credit card; the owner is given a credit line and a minimum payment is due every month. This is the most popular forms of borrowing in the US.

Charge Cards
American Express, Discover, JCB and Diners are charge cards; although, in 2007 Amex and Discover are beta testing a “Bankcard”-issuing their cards through a bank. Charge Cards are not issued through a bank but by a financial institution. JCB (Japanese Credit Bureau card) Issued to Japanese businessmen in the US and Japan. The Japanese Central Banking System, in the 1980’s, created this card so all funds will be processed through the Japanese Central Banking System rather than American Banks.

Private Label Cards
A private label card is issued by a retail outlet and contains the name and logo of the retailer (Macy’s, Gap, Shell, Sears, etc.) It is only accepted by the retailer who issued the card. It is usually financed by a bank or card issuing Management Company.

Secured Credit Card
MasterCard or Visa with a set spending limit secured by an equal amount of funds deposited into an account at the issuing bank. This is popular for people with bad credit trying to increase their credit standing.

Pre-Paid Cards
Similar to phone cards where an owner will purchase the card in increments, $5-$100. When the funds are used up the card can be thrown away or “re-loaded”.

Co-Branded Cards
Also know as Rewards Cards where a large corporation partners with a bank. These cards provide an incentive back to the card holder when used. These cards are more expensive for merchants to accept, higher interchange rates, which is how they can offer incentives to use their card.

Debit/Check Card
This is an ATM card with a Visa or MasterCard logo issued by a bank to its clients. It can be used as an ATM Card or otherwise known as “on-line debit” where a PIN number is entered into a pin pad by the card holder. This transaction passes through the debit networks (NYCE, Pulse, STAR, Interlink, etc.) it does not pass through interchange. The merchant is charged a flat fee with “on-line debit”. When the card is used as a credit card with a signature, the transaction goes through interchange and is called an “off-line debit”. NOTE: A pin pad is needed to accept debit transactions. If a customer has a pin pad they are using from another Merchant Acquirer, it will need to be “swapped out” for a pin pad with an Alpha Card encryption

EBT (Electronic Benefits Transfer)
This is a government issued card which was originally designed to replace food stamps. All federal benefits are now being paid by EBT. If a merchant is set up to accept EBT, they are issued a Financial Credit Services number (FCS ID). This number must be entered into the “Terminal Account Set up Form” in order for the merchant to process via EBT. A pin pad with a Buypass encryption must be used by merchant to accept EBT.

Contactless Cards
New technology that used Radio Frequency Identification (RFID) and allows consumers to pay for purchases by “waving” their card in front of the POS device equipped with the contactless reader.

If you have any questions or would like more information about myposdepot products or services please contact

Grant Rowlands

(866) 480-2433

growlands@myposdepot.com

 

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Tags: American Express, bundled merchant account, commercial cards, competitive edge, credit, credit card acceptance, Credit Card Processing, Credit Cards, Discover, EBT, EBT state and government cards. Customers happier, gift cards, Increase check-out speed, interchange pricing, MasterCard, merchant account services, merchant processing, merchant services, myposdepot, pci compliance, rates and fees, tiered pricing, Visa

Grant Rowlands
National Account Executive
P: (866) 480-2433
C: (215) 421-3333
F: (215) 494-0368

Follow MyPOSDepot & Receive Exclusive Offers!

             
Notice of Confidentiality: This e-mail, and any attachments thereto, is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information.  If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited.  If you have received this e-mail in error, please immediately notify me by e-mail (by replying to this message) or telephone (noted above) and permanently delete the original and any copy of any e-mail and any printout thereof.  Thank you for your cooperation with respect to this matter.

Interchange, what it is and what it is not?

 

Grant Rowlands @ myposdepot.com

Everyone is talking about Interchange, but most people do not define it properly.

Some merchants believe that the rates or transaction fees they pay are Interchange, they are not. There are three components that make up the fees that merchants pay. The processor that runs the transaction charges the merchant for each transaction.

Interchange is the portion that goes to the bank that issued the credit or debit card (if debit card with PIN number used, there are additional fees depending on the network used).

A small percentage of every sale goes to the brand of the card (MC, Visa, Discover), these fees are called the Dues & Assessments fees. Currently the rate is 0.11% plus about two cents per transaction.

The rest is retained by the processor. The processor’s share funds its computer network, customer service, support staff, pay of agent signing merchant and the processor’s profit.

There are over 500 different levels of Interchange. Volume plays a part in Interchange level, the largest retailers pay lower rates than smaller stores for the same card types.

Some businesses (including big box stores) are on Interchange Plus pricing. The Visa debit Interchange is 0.95% + $0.20 per transaction. A $100 transaction will have an Interchange cost of $1.15. If the merchant pays Interchange Plus $0.05, then total with Dues & Assessments (D&A) would be about $1.33.

Most merchants pay tiered rates. If that rate is 1.79% + $0.25, then the $100 transaction costs the small merchant $2.04 or $2.17 if D&A not included in rate.

Consider Interchange to simply be part of your processors wholesale cost. If you are a large retailer, your overall rate is tied directly to Interchange. If a smaller merchant, Interchange has no direct bearing on your rate.

If your statement includes the term(s) of Qualified, Mid-Qualified, Non-Qualified, MQ or NQ; you have tiered pricing, like about 90% of other merchants.

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