B2B credit card processing FREE analysis

Are increasing merchant services credit card fees annoying you?

While technology can optimize fee management, there are multiple reasons new fees or rising fees may occur. Use the information for a quick self-assessment and determine whether it’s worthwhile to engage with a 3D Merchant Services payments professional for further review. This method is easier than my B2B credit card processing fact check, while still revealing problems that must be resolved.  As a processor neutral payments expert, Christine Speedy offers a unique perspective.

The areas needing most attention are rate qualification and other fees.

Here’s a shortcut to determine if you have authorization problems, which directly impact credit card processing transaction fees. Why is this important? Because unless you fix the underlying problem, switching merchant accounts will only provide partial relief from escalating transaction fees like non-. If you have any of these items below on your merchant statement, there’s a problem that is causing unnecessary extra costs.

  • Mastercard Transaction Processing Excellence Fee – Nominal Authorizations
  • Misuse
  • Integrity
  • Compliance or Non-compliance
  • Standard / STD (any)
  • EIRF
  • Data rate I
  • Data Rate II or Data Rate 2
  • Chargeback: FRAUD TRANS-NO CARDHOLDR AUTH
  • Chargeback reason: Compliance
  • Non-Qualified, NQ

Hint: If you open your merchant statement in Adobe Acrobat, in OSX with command F you can copy and paste the terms above. It’s not foolproof due to varying abbreviations, but you only need to have one of the bad items to know there’s a problem.

For card not present business to business, these are two credit card processing interchange types you should see; many often don’t and that is also a problems resulting in higher costs.

  • Full UCAF
  • Data Rate III, Commercial Level III

I don’t know why, but I get calls from other salespeople in the industry looking for solutions to help customers qualify for Data Rate II. Why wouldn’t you want the customer to qualify at Data Rate III? Makes no sense.

I also hear from merchants how they were told that the new solution would fix their level 3 data problems, but it didn’t. If you do preauthorizations, and the solution doesn’t automatically get new authorizations and manage reversals it’s not going to fix authorization problems. Always ask, “how will the payment gateway manage authorization reversals if we don’t settle for the original preauthorization amount’? That’s one of several critical key questions. If they don’t know the answer instantly, move on.

Due to constant changes in card network rules and data security compliance rules, a review by a neutral payments expert is essential. Did you have any red items? It’s time for a deeper dive into why.  Your FREE report will identify issues impacting profits and security, include action items how to fix them, and rarely requires changing financial partners.

credit card transaction fee checkup form

Call Christine Speedy, to reduce merchant fees with new or existing merchant account at 954-942-0483, 9-5 ET. With Christine as your account manager you’re assured a unique experience to maximize profits and security without business disruption.

3D Merchant Services is now WBE and WOSB certified and is rebranding to Greater Good Tech.

Credit card surcharge rules and laws 2023

Looking for a credit card surcharging solution to offset expenses? The rules vary across multiple card brands and terms of acceptance. Here’s an updated review of who can surcharge, what card types, and checklist of how to roll out credit card surcharge at your company. The answers are targeted for business to business merchants, my area of expertise. Historically if a merchant complies with Visa surcharge rules, they’d be compliant with other brands, so we often cite that as the standard.

What is a credit card surcharge?

Surcharge is any fee charged by a merchant for the use of a card.

What’s the difference between a surcharge and convenience fee? Convenience fees can only be charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card. If a merchant only accepts credit cards, it’s prohibited. If a merchant is 100% card absent, merchant cannot charge a convenience fee.

Card brands agree on this for surcharging:

  1. Merchant Discount Rate is the fee, expressed as a percentage of the total transaction amount that a Merchant pays to its Acquirer or Service Provider for transacting on a Credit Card brand. In short, it’s typically all the fees on your merchant statement EXCEPT PCI compliance, terminal rental fees or any other special fee that is not paid via the mechanism of the per-transaction merchant discount fee. Per Visa, merchants must “Limit the amount to your merchant discount rate (MDR) for the applicable credit card or 3% whichever is lowest.” This is the reason merchants can get in trouble if their surcharge solution provider charges a flat amount for every card type.
  2. The Surcharge amount must be submitted separately (in the defined surcharge field) from the Transaction amount in the authorization and clearing message.
  3. The receipt must list the surcharge amount separately.
  4. If the original transaction has a partial or full refund, the surcharge amount must all be refunded proportionally.
  5. Surcharge on debit or prepaid cards is prohibited for all merchants.To ensure compliance use a payment gateway that can identify the card brand and type of card to allow surcharges only on eligible cards.
  6. The fee must be relative to their average cost of card acceptance.

How much can a merchant surcharge?

In short, surcharging is allowed to cover costs, not to make a profit. Let’s face it, based on the rules above, to simplify implementation, merchants will surcharge at the brand level because they lack the technology to discern between product types on a per transaction basis. Taking all that into account what can you surcharge?

  • Cannot exceed Maximum Surcharge Cap, which for Visa is currently 3%, effective April 15, 2023, and MasterCard remains at 4%.

Just because somebody offers it doesn’t make it right. Some companies are offering “free merchant accounts” by offsetting fees with surcharge of 3.5% or even 4%, both exceeding current rules. The average B2B company has much lower than 3.5% effective rate so that was always a violation of card acceptance rules, subject to penalty. The companies offering these services are making big money on the spread of actual fees vs what customers are paying. Again, these are card brand rules violations.

Surcharge checklist:

  1. Notify card brands (Visa etc) in writing at least 30 calendar days before assessing a US Credit Card Surcharge; must state whether will surcharge at the brand level or product level.
    1. https://www.visa.com/merchantsurcharging
    2. http://www.mastercard.us/merchants/support/surcharge-disclosure.html
    1. https://www.discoversurcharge.com
    2. Amex- none required
  2. For card not present orders, disclose verbally if telephone; for online orders minimum 10-point Arial font, but in any case no smaller or less prominent than surrounding text.
  3. Receipt must be delivered with the surcharge as a separate line item.
  4. The surcharge amount must be sent with the transaction for authorization.

 Which states prohibit merchants surcharging?

Per Visa, as of April 15, 2023, they are “Connecticut, Maine, Massachusetts, and Oklahoma. Note also that Merchants located in Colorado may not surcharge more than 2% as per State law.” However, due to federal and other court rulings, multiple states have backed away from the bans. The legislative intent in many of these states was to protect consumers, and not to restrict B2B surcharging, therefore, B2B companies may have exceptions.

What’s the penalty for non-compliance with surcharge rules? Acquirers face fines. Acquirers of any merchant identified as surcharging improperly may be assessed an immediate US $1,000 fine. This is just the beginning and is not all-inclusive. Visa is proactively enforcing surcharge rules from April 15, 2023.

  1. In 2015, the 11th U.S. Circuit Court of Appeals, a federal court, overturned Florida state law as being unconstitutional, allowing surcharges to legally continue in Florida and nine other states that had enacted bans against them. The case was a highly contentious 2-1 decision in which the court’s chief judge said the state surcharge bans (like Florida’s) were “being struck down by a federal court for no good reason.”
  2. In December 2019, Oklahoma attorney general official opinion declaring the state’s no-surcharging law unconstitutionally restricts free speech. 

Surcharge Laws Stories:

  • 2/2023 NJ Businesses Fined For Credit Card Surcharge Without Proper Notice https://lakewoodalerts.com/cracking-down-businesses-fined-for-credit-card-surcharge-without-proper-notice/
  • Texas Updated 2020 – https://faq.sll.texas.gov/questions/9631Senate Bill 560, which went into effect on September 1st, 2017, changed the laws relating to credit card surcharges. Previously, the Office of Consumer Credit Commissioner (OCCC) enforced the law on credit card surcharges, but that is no longer the case.
  • Florida update https://www.epgdlaw.com/are-credit-card-surcharges-legal-in-florida/
  • California update
    https://oag.ca.gov/consumers/general/credit-card-surcharges
  • January 10, 2019 NY Update
    https://www.natlawreview.com/article/parties-case-challenging-constitutionality-ny-no-credit-card-surcharge-law-jointly
  • NY Court of Appeals issues interpretation of no surcharge law  https://www.consumerfinancemonitor.com/2018/10/26/ny-court-of-appeals-issues-interpretation-of-ny-no-credit-card-surcharge-law/
  • 2018 Florida https://www.nbc-2.com/story/40273084/you-can-legally-be-charged-extra-for-using-a-credit-card
  • 2018 case in California http://delfinomadden.com/credit-card-surcharge-ban/
  • 2017 US Supreme Court & NY https://www.usatoday.com/story/news/politics/2017/01/10/supreme-court-new-york-credit-card-surcharge-price-speech/96391718/
  • http://fortune.com/2017/03/29/credit-card-charges-supreme-court-freedom-speech/
  • http://www.orlandosentinel.com/business/consumer/os-nsf-florida-credit-card-surcharges-20160706-story.html
  • https://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

State statutes on surcharge laws

  • https://portal.ct.gov/DCP/Legal/Credit-Card-Surcharge
  • https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXX/Chapter140d/Section28a Massachusetts statutes.

For more information, see Surcharge law resources under Merchant Alerts & Rules Links or contact your acquirer for accurate and current information specific to your situation. Neither Christine Speedy nor this web site provide legal advice. Consult an attorney for all your legal questions.

Does your company want to surcharge? Call Christine Speedy right now at 954-942-0483, 9-5 ET for a compliant solution. Please share your surcharge insights for others and ask any questions below. The information herein is based upon public information available at the time written and may change.

3D Merchant Services is rebranding as Greater Good Tech.

3-D Secure 2.0 Merchant Overview 2021

How do businesses get started using 3-D Secure? Everything teams need to know to add 3-D Secure, a protocol providing an additional layer of security for eCommerce transactions prior to authorization. Think of it like a phone number or account number. 3-D Secure needs to be tied to your specific merchant account and then enabled on the payment gateway to be active.

  1. Unless the gateway provider is the same as acquirer, also known as credit card processor or merchant account provider, ask the gateway service provider for instructions for acquirer.
  2. Contact your merchant account sales relationship manager to request the service. If you don’t have one, call your merchant account customer support.
  3. The acquirer emails the response information to the requestor.
  4. The requestor then enables on the payment gateway or provides information to the end user for final enablement.

3-D Secure is a protocol providing an additional layer of security for eCommerce transactions prior to authorization. It enables the exchange of data between the merchant, card issuer and, when necessary, the consumer, to validate that the transaction is being initiated by the actual cardholder. Ecommerce transactions includes traditional shopping cart as well as any digital payment where the cardholder initiates and completes the payment process. For example, einvoicing or electronic bill presentment and payment are ecommerce transactions.

Each card network has a name for their product that uses 3-D secure, also referred to as 3D Secure, 3DS, 3-D Secure authentication or EMV 3-D Secure. Visa rebranded Verified by Visa to Visa Secure. MasterCard SecureCode (3DS 1.0) merchants are being encouraged to migrate to Mastercard Identity Check which uses EMV 3-D Secure 2.0. American Express SafeKey 2.0 is also available now. 3-D Secure 2.x helps reduce fraud and minimize the need for one-time passcodes, improving the user experience and reducing shopping cart abandonment.

What are merchant benefits for using 3-D Secure?

  • More authorization approvals. False declines are a significant source of lost revenue.
  • Some cards have reduced interchange rates when the authentication is invoked, which are usually over 90% of fees. American Express does reduce rates.
  • Less friction for customers at checkout.
  • Reduced risk of chargeback losses. Fraud liability for “it wasn’t me” automatically shifts to the issuer; Merchants do not have to defend those chargebacks, they never even see them.

How do merchants get started using 3-D Secure?

There are two elements- the payment gateway and the merchant account. Contact your payment gateway company to see if they support it and how to set it up. In most cases, this is simply a back office set up process. Merchants may also need to sign acceptance of pricing. The transaction fees are minimal and typically more than offset by the 11 to 20 basis point reduction in merchant fees on applicable cards.

Christine Speedy, Founder 3D Merchant Services, QIR certified, is a credit card processing expert with specialized expertise in card not present and B2B payment processing technology. Less than 1% of all merchant services sales representatives are QIR certified by the PCI Council. Christine is an authorized reseller for Elavon and CenPOS products and services, in addition to other solutions.

2021 Convenience Fee Rules Explained

Credit card convenience fees 2021 rules explained. Visa rules on convenience fees as outlined in Table 5-5 Convenience Fee Requirements remain unchanged since 2020.

What’s a convenience fee and when can I use it? Convenience fees can only be charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card. If a merchant only accepts credit cards, it’s prohibited. Alternatively as an example, if a merchant gets 99% checks in the mail, ACH, and wire, they could be eligible to charge a convenience fee.

The following are all elements that can impact whether you can charge a convenience fee:

  • Federal law
  • State law
  • Rules of card acceptance, for example, Visa Core Rules
  • Merchant acquirer (credit card processor)

Who can and cannot charge a convenience fee?

  • If the Merchant operates exclusively in a Card-Absent
    Environment, cannot charge a convenience fee.
  • Convenience fee can only be charged by the merchant that provides the goods or services to the cardholder, not a third party.

Visa convenience fee rules excerpts:

  • Cannot be charged on a Recurring Transaction or an Installment Transaction.
  • Must be listed as a separate line item on the receipt.
  • Must be included with the total transaction. In other words, the receipt must split out the amount, but only one transaction is sent.
  • Added only to a domestic Unattended Transaction. In other words, customers self-pay.
  • Must be disclosed to customers as a charge for alternate payment channel convenience.

How much is allowed for a convenience fee?

Per Visa, the convenience fee must be a flat, or fixed amount, regardless of the value of the payment due. There isn’t a limit on the amount and a merchant may choose to dynamically generate the convenience fee amount. Regardless, the consumer must be able to opt-out prior to completing the transaction.

See Visa Core Rules Table 5-5: Convenience Fee Requirements for more information. Note, this is a change from the 2018 blog post.

Rules may vary by card brand, but typically, if a merchant complies with Visa rules, they’ll be compliant with the other brands. A convenience fee is not the same as a credit card surcharge for Visa, which also has another type called a service fee,which applies to government and education only.

Call Christine Speedy, PCI Council QIR certified, for simple solutions to complex payment transaction problems, 954-942-0483, 9-5 ET. CenPOS authorized reseller based out of South Florida and NY. CenPOS is an integrated commerce technology platform driving innovative, omnichannel solutions tailored to meet a merchant’s market needs. Providing a single point of integration, the CenPOS platform combines payment, commerce and value-added functionality enabling merchants to transform their commerce experience, eliminate the need to manage complex integrations, reduce the burden of accepting payments and create deeper customer relationships.

Please share your convenience fee insights for others and ask any questions below.

Massachusetts credit card surcharge bill repeals ban

Massachusetts joins other states that still have a credit card surcharge ban on the books, with a bill to repeal. Since the 2017 US Supreme Court ruling regarding the NY case that it regulates speech, every state with a surcharge has repealed, introduced a bill to repeal, has already lost a case in court, or is in the process thereof. This is especially good news for B2B companies.

Massachusetts Senate and House are both in agreement with the February 2021 bill and it is now in committee with status “arrived” as of April 13, 2021.

https://malegislature.gov/Bills/192/HD2907.Html

https://malegislature.gov/Committees/Detail/J17/192/Bills/asc/EntityNumber/?current=True&pageNumber=9

Colorado also has a bill pending. The U.S. District Court for the District of Kansas approved a part of plaintiff’s motion for summary judgment in an action concerning whether a state statute that bans credit card surcharges violates the First Amendment.

Many in the legal and credit card processing community support B2B merchants can surcharge in all states and that the regulations only apply to consumers. Numerous court cases have resulted in positive results for plaintiffs.

Does your company want to surcharge? Call Christine Speedy right now at 954-942-0483, 9-5 ET for a compliant solution. Please share your surcharge insights for others and ask any questions below. The information herein is based upon public information available at the time written and may change.