Visa, Mastercard, American Express, and Discover, postponed new interchange rates and fees originally scheduled to take effect in April, 2020 until at least July 17, 2020 due to Covid-19 Coronavirus. The announcements provide some relief to battered and closed businesses. Every Spring most networks tweak their fees.
American Express will delay the changes to their assessment fee and their Inbound Fee (International) until October 2020. TSYS will delay the PULSE annual fee increase ($4.00 increase to current $12.00 fee) until July 2020. The NYCE annual fee will be billed at the new rate of $16.00 in August to all applicable merchants.
Other card network fees were relatively minor. It’s noteworthy that many continue to be penalties related to authorization compliance, for example, fees for not performing authorization reversals.
If your company has a business to business component and more than five hundred thousand in credit card processing revenues, this article is for you. If you answer yes to any question, you’ll almost certainly increase EBITDA with very little effort by switching to CenPOS. Changing your merchant services provider is not required.
- Do you have a desktop terminal?
- Do you use authorize.net, Paypros, or Paypal for your payment gateway or virtual terminal?
- Do you have mixed swipe and card not present transactions on the same merchant account?
- Do you preauthorize cards and charge when ready to ship- sometimes weeks later?
- Do you ever preauthorize card for one amount, but capture or settle a different amount (change order)?
- Is MasterCard Data Rate I or II on your merchant statement, but not Data Rate III?
The list is what I call ‘easy pickings’ for big financial impact, and I don’t even need to see your merchant statement. CenPOS fees will nearly always be more than offset by merchant fee savings. That’s not necessarily a big enough reason to make a change, but isn’t it compelling enough to call 954-942-0483 now and learn more about how our platform can help your company?
A telemarketer called from “Express Processing Payments”, with the pitch, “Have you heard about new regulated rates that Visa and Mastercard introduced for small businesses only?” And further, “…reduce your rates 20-50%.” Let’s dispel this claim right now. There’s no such thing.
The only ‘recent’ government regulation regarding rates, are those from the Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In August 2011, I reported on the proliferation of robo calls that followed the federal legislation for debit card transactions:
Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction will be the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. This provision regarding debit card interchange fees is effective on October 1, 2011.
What does this mean to merchants?
- The maximum the issuer (if they meet regulated size) can receive is .05% plus $.21 plus $.01 if qualified.
- What merchants pay are determined by the salesperson selling them.
- Visa debit interchange rate for CPS Retail was 0.80% + $0.25 per transaction prior to the new legislation. If a small business received a 50% reduction in debit fees, the average small business processor still increases their profits significantly.
The Visa Fall 2014 interchange reimbursement rate release is now available for PDF download. At a glance, I didn’t spot any changes to rates, following broad changes and increases for business to business since April 2013.
The transaction and volume minimum did increase for the Credit Threshold, but the maximum chargeback ratio remains the same at 0.020%.
New higher minimums for credit performance threshold.
For merchants, no news is good news! If your company is business to business, managing interchange is critically important. The Business Electronic Interchange Reimbursement (EIRF) Fee increased from 2.75% to 2.95% in the last year. Merchants can avoid EIRF and Standard with improved interchange qualification management.
Click here for handy web page with links for to all credit card brand rates. As of October 21, 2014, MasterCard has not released an update for Fall, however, the spring update is labeled 2014 – 2015, so perhaps there will not be one.
Building supply companies traditionally were high volume checks, and to some extent still are. But with increasing financial pains of customers, most now also accept credit cards. Credit card processing fees can make a significant dent in profits on low margin sales. But there are other deeper issues as well.
Pain points accepting credit cards in the lumber yard and building supply industry:
- High fees
- Security- storing cards for regular customers
- Protection from disputes and resulting chargeback losses
- Expired credit cards
- Hours of operation impacts when remote payers can pay an invoice
Part 1 of this series addresses high credit card processing fees.
For the lowest fees, the merchant must have ALL of these elements:
- Pass through or interchange plus pricing (not sure? See this video Interchange Plus Pricing- in 60 seconds)
- System (hardware/software) that will pass enhanced data required for level III processing
- Interchange management system
The four most challenging rules building supply merchants have trouble complying with for business, corporate and purchasing cards:
- Authorization and settlement within 72 hours for all card not present sales
- Authorization amount and settlement amount equal
- Sending correct level III data, enhanced data that applies only to certain cards
- Sending transaction correctly with Retail, MOTO (mail, phone, or fax orders that are key-entered) or ecommerce indicator
The test: Is your business qualifying for the lowest interchange rates possible? Pull out your merchant statement and review the pages with interchange rate qualification. (This is often the last pages of a merchant statement. If you don’t have this detail, you have a problem. )
- Are there any descriptors with this text: STD, Standard, EIRF, electronic, commercial data rate I, commercial data rate II, commercial data rate 2, comm data rt 1, comm data rt 2, Commercial Card Electronic, Purchasing Data Rate 2?
- If you answered yes to any of the above, then your business is NOT qualifying for the lowest fees possible.