The FALL 2009 ASSOCIATION INTERCHANGE COMPLIANCE GUIDE included over 100 changes, making it one of the larger updates in recent history. Merchants at the same time were switching suppliers with fever, however the new updates won’t really be felt until the November or December merchant statements are reviewed.

The fall rush to change suppliers is most likely a result of the multiple new Visa fees and the MasterCard brand usage fee added this year, which went into effect April-July. Requirements to qualify for specific interchange rates for International interchange programs are outlined. Many larger merchants will see rates approaching or over 3% when all fees are added, for foreign card transactions. For example, MasterCard
COMMERCIAL DATA RATE II = 2.25 %( US Location w/Global Corporate Acquirer Program Support Fee .55%) . (Non US Issued Cards Only.)

Additionally, as previously reported, new requirements are in effect to qualify for certain B2B credit card transactions. B2B Merchants can expect to see effective rates rising above 3% in the card not present environment.

WORLD ELITE RESTAURANT = 2.20% + $.10
HIGH VALUE RESTAURANT = 2.20% + $.10
ELECTRONIC PAYMENT ACCOUNT DATA RATE I = 2.65% + $.10
ELECTRONIC PAYMENT ACCCOUNT DATA RATE II = 2.40% + $.10

The changes this fall continue to expand the need for merchants to work with processors who provide the following:
- Transparent reporting so the merchant can clearly identify interchange rates qualified for.
- Interchange management- interchange continues to grow more complicated and merchants who best control costs will have a payment processor who helps them with interchange management.
- Flexible Technology to manage interchange- this is probably the single biggest growth area in the payment processing industry as merchants need to get away from static systems and move to smart technology with least cost routing solution.

A review of a new Volusion ad for merchant accounts reveals the truth and hidden information about merchant services. I thought my web store CEOgolfshop.com was highjacked when I went to my admin page and all I saw was an ad for merchant services from Volusion. I hit reload. I checked the URL I was at, and yep, it was my web store. But it was my admin page, not my public home page and they interrupted my ‘home’ page with their ad for a Volusion merchant account.

It’s actually a pretty compelling ad. I’ve used Volusion for several years and if I wasn’t in the merchant services business, I’d definitely call or click through. Since I am in the business, I clicked through and here’s what comes next.

Here’s why I don’t like this advertisement and you shouldn’t be enticed this or any similar ad. We all know there isn’t one low rate for everything, right? They capture a bunch of information about your company, and you have no details at all about the deal. Not only that, but it isn’t any where else on their web site. If you read my web site, you’ll find lots of information about interchange rates, the real truth about the merchant account application and underwriting process and lots of other insights so you can make an informed decision before providing company details.

Beyond my personal annoyance, let’s look under the hood at the offer. What? There is no information?
Fortunately, I’ve already been through the details of their merchant account offer before, so I’m familiar with more than what’s posted here. However, if you look harder, there is more information on the web site, they just don’t provide any links to it from the ad or sign up form. As of this writing, they are using Global Payments Direct, Inc. as their merchant services partner provider. Global Payments Direct is a publicly traded independent services provider GPN :NYSE). Current assets are down, intangible assets are up significantly compared to other years and debt is up 50%. But I digress as all of that is irrelevant.

The retail rates quoted have nothing to do with your Volusion merchant store. Retail rates only apply to card present transactions, and the customer must sign a receipt.

Will you save with a volusion merchant account? There’s no way to tell based on the information provided. You will not be getting 2.17% ecommerce as a flat rate. They do explain on their site there is a $.27 per transaction fee, gateway fee, statement fee, etc all pretty standard stuff. But what you don’t know is, what transactions will qualify for the 2.17% ecommerce rate?

Is that for debit cards? With debit interchange for ecommerce at 1.55% plus $.15 per transaction, that’s 63 basis points profit. Now I don’t know if that’s what they are referring to, but if you have a sizable business, please call me and you’ll save real money! I can’t imagine this being a good deal for anyone but small businesses with under $50,000 per year. What is their rate for rewards cards, which represent usually over 40% of cards presented? If you authorize, but don’t capture on the same day, it’s highly unlikely you’ll ever pay that rate, but will probably pay 20-70 basis points more or .20% to .70% more.

See also my article review of Volusion merchant accounts 101.

In conclusion, you can’t tell from their ad, but in all likelihood their solution is as good as any if you have a very small business with under $5000/mth since it will be easy to implement. However, be sure to read the fine print. Is your business expected to grow? What are the penalties for switching to another provider if you are unhappy with rates later ?

Visa recently announced several new fees impacting merchant credit card processing costs. Merchants working with us will get these announcements on their statements, in addition to any other contacts, and all costs will be passed through.

Visa Acquires Processing Fee (APF) Visa is rolling out a fee of $0.0195 on all Visa branded authorizations acquired in the US regardless of where the issuer/cardholder is located. This fee will be effective July 1, 2009. This follows a MasterCard Network Access and Brand Usage Fee (NABU) of $.0185 for all U.S. issued transactions settled with MasterCard, announced in April 2009.

Visa Zero Floor Limit Fee - (clearing without authorization) This fee is applied for any clearing transaction submitted that cannot be matched to previously approved or partially-approved authorization transactions. The new fee will be $0.10 and is effective July 1, 2009.

Visa Misuse of Authorization Fee (authorization without clearing). Beginning July, 2009, Visa will apply the announced fee of $0.045 to authorizations that are not followed by a matching clearing transaction (or in the case of a cancelled or timed out authorization, not properly reversed).

International Service Assessment Fee Effective April 4, 2009 Visa implemented the International Service Assessment (ISA) fee of 0.40% (40 basis points) on all international (non U.S. card) transactions processed by a U.S. merchant. This fee is similar to MasterCard’s existing U.S. Cross Border Assessment Fee which is 0.30%.

Editors comments: these fees are not on the general interchange schedule that most people look at, however, the clever naming does not change the fact that these are costs that will be passed on to the merchants. If you have a small average ticket, a couple of pennies could increase your effective rate about .20%. If you have a lot of dollar transactions that are not reversed, such as when setting up a free online trial account, then the $.045 could also become quite costly. Your software program may not have a solution to cancel the authorizations, but hopefully this is being addressed by the major software providers.