News, Rates, Proposed Changes

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Scott Talbott

Senior Vice President of Government Affairs

Electronic Transactions Association

stalbott@electran.org

This finalizes the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Pub.L. 111-203, H.R. 4173) Banks argued that they needed the add'l 0.05% plus 1-3¢ (5 basis points) to combat against fraud, as if the profit in that rate weren’t already enough to cover overhead like fraud control. In December, the Fed’s research found the average cost between 4¢ to 7¢ per transaction.

If a merchant swipes the debit card as a credit card, or the customer tells the merchant to run it as credit, it is Signature Debit, whose swiped (card present) interchange rate is apx 1% + 20¢ per item, PLUS whatever the Processor adds for processing.

There are two components of debit card processing fees:

1. Interchange Fees which go to the Issuing Bank (like Chase Debit Mastercard) for Signature Debit [offline] OR the PIN-based Debit Network [online] (like InterLink, Shazam, PULSE, Maestro, see the back of your debit card),

and the

2. Processing Fees which go to the Processor, (Merchant Service provider) who must mark up Interchange to pay for its network and processing services.

Signature Debit costs a national average of 56¢ per transaction, and remains unchanged and unregulated.

It will still remain to be seen what merchants will actually be charged in the end, since the Credit Card Processor ultimately decides the rate the merchant is charged. Merchants who have a pricing structure that is Tiered or Bundled may see no benefit or change in their fees whatsoever. Their processor can pocket this savings for themselves.

Processors who charge true Interchange Plus pricing will always benefit their Merchants because their fees are always tied to the actual costs of each transaction. Merchant Service Group always prices by Interchange Plus Pricing.

Click to Read PDF of only the Durbin Amendment

Click to Read Full Text of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 including Durbin Amendment (see Sec. 1075. on page 693)

Senators led by Richard Durbin, the Illinois Democrat who pushed to include the fee caps in the Dodd-Frank Act, turned back the proposed delay in a 54-45 vote today that left the amendment six short of the 60 needed for approval.

Visa and MasterCard, the world’s biggest payment networks, dropped the most since Dec. 16 after the vote, before rebounding by the end of trading. Visa rose to $76.75 by 4 p.m. in New York Stock Exchange composite trading, after falling as low as $74.37. MasterCard, which dropped as low as $258.34, closed the day at $269.96. Shares of U.S. banks slipped.

The caps proposed by the Fed in December and scheduled to take effect July 21 would cut revenue by about $12 billion a year at lenders including Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. In the most extensive lobbying fight to arise from Dodd-Frank, the banks pushed to roll back or delay the Fed rule, battling efforts by Wal-Mart Stores Inc. and Target Corp., who would pay less under the caps.

“We should let the Federal Reserve issue this rule,” Durbin said before the vote. “If more needs to be done, I’m on board, but the notion that we can’t even trust the Federal Reserve to come up for a rule on this is just plain unfair.”

Retailers Happy

Visa and MasterCard establish the swipe fees, or interchange, and pass the money to card-issuing banks. The central bank has proposed capping the fees at 12 cents a transaction, replacing a formula that averages 1.14 percent of the purchase price. Barbara Hagenbaugh, spokeswoman for the Fed, declined to comment after the vote.

Durbin and his supporters have said reducing the fees and increasing competition in the debit-card market would cut down on one of the largest monthly expenses for many retailers. The savings, Durbin and retailers say, will be passed to consumers.

“These bipartisan reforms will bring meaningful relief to millions of merchants and consumers,” Sandy Kennedy, president of the Retail Industry Leaders Association, said in a statement after the vote. “With this distraction now behind us, retailers await the Federal Reserve’s final rules so they can begin implementing these reforms and saving consumers money.”

Banks and payment networks have said the fees are necessary to maintain the infrastructure and technology of a system that has brought more revenue to retailers than they have been charged.

‘Stunning’ Vote

“It is stunning that the Senate chose to ignore every major banking regulator who warned that this rule could harm community banks and credit unions -- and possibly even result in bank failures at a time when our country can least afford it,” said Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a group whose members include JPMorgan and Bank of America Corp.

The Senate action marks the end of the fight between Durbin and Senator Jon Tester, a Montana Democrat, which began when Tester and Senator Bob Corker, a Tennessee Republican, proposed a two-year delay in March. Tester in May cut his proposed delay to 15 months in search of the 60 votes needed for Senate passage. Durbin, the Senate’s No. 2 Democrat, had vowed to block efforts to remove or delay the rule.

Today’s vote split senior Democrats, with Senate Majority Leader Harry Reid of Nevada siding with Durbin and Banking Committee Chairman Tim Johnson of South Dakota backing the Tester-Corker proposal. Others were caught in between a vote to support Durbin during last year’s debate and a desire to support the delay, Corker told reporters after the vote.

Political Worry

“Some of the folks were worried, I think, politically,” Corker said. “Even though they knew this policy was right, they were worried about voters back home not understanding their vote when they had voted for Durbin the first time.”

With the public comment period for the rule set to end in the next few weeks and the July 21 implementation date coming up, Corker said there was little that can be done to stop the caps from taking effect.

“I think, for a period of time, the water’s sort of under the bridge,” he said.

MasterCard asked the Fed to reconsider the details of the rule before making it final.

“MasterCard calls on the Federal Reserve to carefully consider the thousands of submitted comments raising concerns for the unintended consequences of the proposed debit interchange price control,” Noah J. Hanft, the company’s general counsel, said in a statement.

Visa’s Plans

Visa said it will provide investors more details about the company’s plans after it reviews the final rules.

“The long-term impact of the Dodd-Frank debit provisions on Visa will be manageable,” Chief Executive Officer Joseph W. Saunders said in a statement. “We have spent the past year preparing for all potential outcomes, and we have plans in place to evolve our U.S. debit strategy.”

Tien-tsin Huang, an analyst at JPMorgan, said shares of the payment networks may rally because the “outcome is not a surprise” and he advised clients to buy.

The vote “could ironically be a fine outcome for both stocks in need of certainty sooner rather than later,” Huang said in a research note after the vote.

Bernanke, Bair

The effort in Congress to reconsider the rule had been bolstered by regulators. Fed Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair questioned a part of the law that exempts banks and credit unions with less than $10 billion in assets, saying it might harm smaller card issuers. Acting Comptroller of the Currency John Walsh sent a March 4 letter to the Fed calling the proposal “unnecessarily narrow.”

In all, 12 senators who voted to include the swipe-fee provision in Dodd-Frank last year backed the delay today. That wasn’t enough to get the measure to 60 votes.

Senator Roger Wicker, a Mississippi Republican who had backed the original Durbin plan, said he voted for the delay today because “the amendment has changed and the Durbin language has changed.”

“I thought it was a reasonable compromise, on balance, and a very close call,” Wicker said.

The debit caps could still be derailed before July 21. The St. Louis-based U.S. 8th Circuit Court of Appeals is scheduled to hear arguments next week in a case filed by TCF Financial Corp. The Wayzata, Minnesota-based bank has appealed a lower court ruling that denied the lender’s request for an order suspending the caps.

--With assistance from Kathleen Hunter in Washington, Andrew Harris in Chicago and Donal Griffin in New York. Editors: Lawrence Roberts, Gregory Mott

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

The Google Wallet initially supports MasterCard credit cards from Citi and users can pay for goods at 120,000 U.S. shops including Macy’s, Walgreens, Subway, Noah’s Bagels, American Eagle, Bloomingdale’s, Peet’s Coffee, Toys ‘R’ Us and others.

Sprint is also a partner at the launch, since it sells Google’s Nexus S phone, one of the only phones in the U.S. capable of using the new Google Wallet. The Nexus S supports NFC, an open standard backed by many companies including Microsoft, Visa, Sony, Nokia and AT&T. However, Android now supports NFC technology and additional phones are expected to become available soon.

“We’re extending an open invitation to merchants and ecosystem partners like payment networks, carriers and banks to join us in creating tomorrow’s best shopping experience,” said Stephanie Tilenius, vice president of commerce for Google.

The wallet has some features that haven’t been in previous attempts to offer mobile wallets. For instance, the wallet can include multiple cards. In addition to the Citi card, Google is including a prepaid Google payment card that users can fill up from any credit card.

In addition, the wallet can include loyalty cards. When users pay for an item at the point of sale, with one tap they can transfer multiple cards, including their credit card and the loyalty card.

“The idea is to continue to partner and add cards to the wallet so hopefully I’ll be putting all my cards in there,” said Osama Bedier, vice president of payments at Google. The executives unveiled the new service at an event in New York that was webcast.

Google expects to officially release the product this summer in the U.S. Google officials also said that some 300,000 international retailers have the capability to support the mobile wallet, but they did not elaborate on plans outside of the U.S.

In addition to the wallet, Google introduced Google Offers, which lets users collect electronic coupons and submit them at the point of sale. People can find coupons online and click on a button to send the coupons into their Google Offers account to make them available on the phone.

Coupons can also be redeemed simply by showing a cashier the coupon, so they can be used at retailers that haven’t yet upgraded their systems to accept NFC.

Google Offers will become available to people in San Francisco, New York and Portland this summer.

Google hopes to expand the wallet to include many other items including driver’s licenses, hotel keys and concert tickets.

Later this year, Google also plans to add a feature that will let retailers pass receipts to users via the Wallet technology.

Companies have been trying to kick-start mobile payments for around a decade, and Google acknowledged that despite its announcement, there are still barriers. “Today we’re announcing the first steps to making this vision a reality. It will take a while to come to fruition,” said Tilenius.

Security is one issue that may have slowed down the progress of mobile wallets. The Nexus S uses a smart-chip secure element from NXP, the same kind of chip used in electronic passports and in contactless and contact-based credit cards, said Rob Von Baron, a security engineer at Google. The cards have tamper sensors so if someone tries to physically access a card it self-destructs, he said. It also has protection against laser attacks. All payment card credentials are encrypted and stored on the chip, which is separate from the Android device memory and accessible only by authorized programs.

Google has added other software security elements. Users can first set a PIN to unlock the phone. They’re then asked for a PIN to open the wallet. They can also set a preference so that the card is inactive unless the wallet app is open.

“Security is very important to us,” Bedier said.

Distributing capable phones is another challenge. On stage during the event, Fared Adib, Sprint’s vice president of product development, said it would work with “the Samsungs, HTCs and Motorolas” of the world to support Google’s program. But there was no mention during the prepared remarks if the system would support operating systems other than Android.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy’s email address is Nancy_Gohring@idg.com

will begin to monitor compliance to the authorization guidelines with billing scheduled to begin on August 15, 2011. And like Visa, MasterCard has set its Processing Integrity Fee at $0.045 per occurrence.

While the purpose (encourage proper compliance with transaction authorization standards) of the two programs is similar, there are some differences in how they will monitor compliance. While both Visa and MasterCard will assess fees when authorized (approved) transactions cannot be matched to a clearing settlement record or an authorization reversal, Visa allows 10 days (20 days for T&E merchants) while MasterCard provides a 120 day window (with T&E merchant segments initially exempt).

Both Visa and MasterCard will penalize the occurrence of "ghost authorizations" (authorizations that are approved but never cleared), as these can adversely impact a cardholder's open-to-buy, leading to increased declines and confusion at the point of sale. However, within Visa’s program the authorization amount and settled amount do not have to match whereas MasterCard will apply its Processing Integrity Fee if the final transaction amount was less than the authorized amount or the authorized amount varies from the subsequent clearing message amount.

The bipartisan Debit Interchange Fee Study Act ( S. 575) wants the U.S. Treasury to conduct a study to determine how debit interchange regulation will affect consumers and small financial institutions. The act calls for two-year delay on implementing swipe-card fee reform, which includes one year to conduct the study.

If it passes, it would delay the Durbin Amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was set to be finalized next month and take effect in July. This amendment would cap the interchange fee that a merchant's bank pays a customer's bank when merchants accept debit cards at 12 cents per transaction.

Though it's also known as a swipe fee, the interchange fee also affects merchants who do business online and over the phone. Sen. Dick Durbin (D-IL) introduced the bill last May, and said merchants, at that time, were being charged an average of 44 cents per debit-card transaction.

Durbin said in a statement released Tuesday that interchange fees on debit cards charged by Visa and MasterCard on behalf of its bank partners are equal to $1.3 billion per month, and $16.2 billion annually. Half of that amount goes to 10 banks, he said.

The banks and the debit card issuers, naturally, oppose the bill, which is designed to help merchants. Those opponents say swipe-fee reform say that banks would not get a substantial return on investment by charging just 12 cents per debit card transaction.

TCF National Bank last Friday filed an injunction against the Durbin Act, stating it would cut the revenue of banks and credit unions by about $12 billion per year, and result in increased banking fees and costs for consumers.

But NRF senior vice president/general counsel Mallory Duncan said merchants would be able to pass lower swipe fees along to consumers in the form of discounts and other benefits as soon as reform goes into effect in July. This can't happen if Congress lets bankers stand in the way.

Katherine Lugar, executive vice president/public affairs for the Retail Industry Leaders Association, in a statement urged the senate and congress to stand up for merchants and consumers and vote against the Debit Interchange Fee Study Act.

"The bipartisan swipe-fee reforms signed into law last year will bring fairness and competition to the broken debit market and will save consumers billions by ending decades of price-fixing by Visa and MasterCard," Lugar said.

According to the Wall Street Journal, U.S. banks are debating letting debit card transactions bounce like checks. And banks may charge more to merchants in order to guarantee debit card payments. While consumers could face bounce fees like they do for checks. Both developments could steer use away from debit cards to other forms of payment not regulated by Dodd-Frank.

In addition it was recently reported that banks are considering a $50 cap on debit card purchases.

Merchants that have relied on ATMs in store to avoid taking credit and debit card payments may soon find this strategy of steering customers to cash more difficult to implement as banks begin to increase ATM fees to $5 and change ATM policies on customers using foreign ATMs.

We've questioned how debit card Interchange regulation will benefit small merchants. And we knew that banks would change business models in response to regulations. None of these developments are good for small merchants.

Senators worked to complete their bill late yesterday and will introduce the legislation today as House Republicans got a first look at language that would put a hold on Federal Reserve rules aimed at making fees paid by retailers “reasonable and proportional” to processing costs, as required by the Dodd- Frank Act.

Senator Jon Tester, a Montana Democrat, will file a bill that would place a two-year delay to the rules as the effects of the Fed proposal are studied. Tester, who will be taking on the second-ranking Democrat in the Senate, Richard Durbin of Illinois, as he pushes the measure, said he thinks he can get the support to move the bill forward.

“We’re going to work hard to get more sponsors on this bill when we get it dropped in today and I think there will be solid support,” Tester said today in an interview on Bloomberg Television.

House Republicans are planning a bill that would impose a shorter hold, Representative Randy Neugebauer said yesterday.

“In the House bill you’re going to see a one-year delay and a study of what should be the composition of an interchange fee,” Neugebauer, a Texas Republican who leads a Financial Services subcommittee, said in an interview.

Wal-Mart, Target

The Fed’s December proposal to cap debit-card fees at 12 cents per transaction set off a battle that has pitted lobbyists for retailers Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT) against financial-industry groups that say the limits could cost card issuers such as Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) $12 billion in annual revenue.

Representative Shelley Moore Capito, a West Virginia Republican who is in line to introduce the House bill, said lawmakers will seek input as they complete the measure.

“We’ve been looking at how we can answer what I think are some of the very unanswered questions,” Capito, who leads the Financial Services subcommittee that oversees consumer credit, said in an interview yesterday. “We’re closing in on deciding what we’re going to do.”

Joint Study

The House bill would require a joint study conducted by the Fed’s board, the chairman of the Federal Deposit Insurance Corp., the Comptroller of the Currency and the chairman of the National Credit Union Administration, according to a draft copy of the legislation obtained by Bloomberg News.

The study would focus on two primary components: the costs associated with debit transactions and the effect of the Fed’s proposal on consumers, merchants and card issuers, as well as an examination of network exclusivity and routing provisions.

The regulators would be required, within eight months, to submit a joint report to Congress that would include any recommendations for revisions. The central bank would then be required to revise the rules if at least two Fed board members and the FDIC, OCC and NCUA chairmen agreed that consumers would be adversely affected, the exemption for small institutions would be ineffective or that the rules didn’t account for the full costs associated with debit-card transactions, according to the draft bill.

Should the Fed be required to revise the rules, it would be required to finish the changes within four months.

Visa, MasterCard

The Fed’s proposed caps would replace a formula that averages about 1 percent of the purchase price. Shares of Visa Inc. (V) and MasterCard Inc. (MA), which set the so-called interchange fees and pass the money to card-issuing banks, fell more than 10 percent after the central bank released its proposal Dec. 16 on investor concern the caps would harm their business model.

Dodd-Frank requires the Fed to complete work on the caps by April 21 and have them implemented by July 21.

Senate talks have been ongoing behind closed doors for the past few weeks, with Tester and Senator Bob Corker, a Tennessee Republican, leading efforts to craft a bipartisan bill.

“We need to understand that we’re not repealing this rule,” Tester said today. “We’re going to delay it, we’re going to study it and we’re going to take a look at it to make sure it is what it is advertised as.”

House lawmakers have been more outspoken on the issue, with Republicans and Democrats using a Financial Services Committee hearing on the issue last month to question Fed Governor Sarah Bloom Raskin on the effects of the proposal on smaller lenders.

First Step

The House will wait for the Democrat-led Senate to take the first step, Representative Spencer Bachus said last week. Bachus, the Alabama Republican who leads the House Financial Services Committee, said his members wanted “assurances” that the Senate was ready to act before they took on the issue.

Legislation to delay the fee caps would end the first phase of a behind-the-scenes lobbying battle that started after the provision was signed into law as part of Dodd-Frank in July. Retail and merchant groups have pushed lawmakers to defend the measure, which was backed by 64 of the Senate’s 100 members.

“We made history last July when we passed this legislation and I think we took the financial-services industry by surprise,” Dennis Lane, a 7-Eleven Inc. franchise owner in Quincy, Massachusetts, said during a visit to Washington last week. The banking industry has made pushing back the rules a top priority since then, Lane said.

Fighting Back

Retailers have fought back, bringing about 200 retail and convenience store owners to Capitol Hill last week to lobby against a delay. Before visiting lawmakers’ offices, the business owners stood out in front of the Capitol Building in the pouring rain, rallying to defend the Fed proposal.

Tester’s legislation, if it is introduced today, will coincide with the arrival this week of more than 900 bankers in Washington for the American Bankers Association Government Relations Summit. The bankers will make their way to Capitol Hill to visit congressional offices, according to John Hall, the Washington-based group’s spokesman.

Durbin, the Illinois Democrat who crafted the swipe-fee provision, took to the Senate floor last week to battle the efforts to delay the proposal. He accused small banks and credit unions -- two groups that were given an exemption from the rules -- of providing political and lobbying cover for the large banks and payment networks.

‘Shoveling Billions’

“It wasn’t that long ago we were shoveling billions of taxpayer dollars to these banks, so they can’t lobby,” Durbin said March 10. “The credit card companies can’t lobby because they have no popularity with the American consumer, so what do they do? They have some beards.”

Fed Chairman Ben S. Bernanke and FDIC Chairman Sheila Bair questioned the effectiveness of the exemption for lenders with less than $10 billion in assets, bolstering the argument of the community bank and credit union groups that have urged a delay. The efforts have gained traction. As of the end of last week, 10 senators who voted for the proposal had signed onto comment letters with the Fed voicing concerns over the effectiveness of the proposal.

The stakes are high, said Representative Peter Welch, a Vermont Democrat who has pushed for the rules.

“I haven’t been in Washington that long, at least not as long as Senator Durbin, but I do know, in Washington, to delay something means to kill it,” Welch said.

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

#1. According to an “Economic Analysis of the Effects of the Federal Reserve Board’s Proposed Debit Card Interchange Fee Regulations on Consumers and Small Businesses”, approximately 75% “of the merchants that accept debit cards, and almost all small businesses, have contracts with their merchant processors under which the merchant pays a blended price covering all card transactions and is inclusive of all fees including interchange fees. Merchant processors are unlikely to pass on all of the debit card Interchange fee reductions to these smaller merchants and may not pass on much, if any, of the reductions in the near term.”

This regulation doesn’t take this real life fact into account, so most small businesses will not see any savings, putting them at a further disadvantage to larger competitors.

#2. The proposed regulations will cost small businesses higher checking account fees and reduced services. According to analysis, banks will be forced to recoup lost Interchange income currently used to subsidize other bank services like checking accounts. Most don’t believe that a two tiered debit pricing system (an artificially low Interchange rate set by the government for cards issued by mega-banks while leaving the existing higher debit Interchange rates in place for debit cards issued by community banks and credit unions) will survive or even be practically realized due to competitive market forces and network steering. And given that community banks and credit unions don’t have the economies of scale to compete with mega-banks; it will be bad for small businesses and our communities to lose these institutions as we know them today. If the law fails to account for market forces then many community banks may not survive, a result that is bad for small businesses that rely on them for lending and other important services to run their business.

#3. Even if a two tiered debit pricing structure is supported and somehow succeeds in exempting community banks and credit unions from government price controls, small merchants are disproportionate in communities where the majority of their customers will be using debit cards issued by these exempt community banks and credit unions. Where is the debit Interchange savings going to come from then? The result is that small merchants will be further disadvantaged with higher costs versus large merchants operating in markets primarily served by mega-banks.

#4. The current regulation leaves too many loop holes. It doesn't address credit or rewards Interchange; doesn't address leaving card data security to small businesses who can least afford it; and leaves wiggle room for big banks to shift debit to exempt prepaid or use other creative measures like adding annual card fees or restricting usage on consumer debit cards in an attempt to steer consumers to switch to higher priced charge or rewards credit cards.

#5. Small businesses have more to their story on the costs to accept card payments than just debit Interchange. Unlike big business where Interchange expense is the number one issue, this is not the case for small business. Small businesses deal with issues major retailers do not, like the fine print of gimmick rates-as-low-as, introductory offers, non-qualified fees, long term contracts, termination penalties, and lots and lots of hidden monthly and transaction fees. The big chains have told the “swipe fee” story but in reality the issues and concerns of the big and the small merchants are vastly different.

Yes - in principal we are opposed to government regulation in free markets (lots of entrepreneurs are) where politicians that don't know anything about the businesses and industries they attempt to regulate are making decisions on last minute amendments to bills that they haven’t even read. I am highly skeptical of the influence by mega retailers and mega banks that spend hundreds of millions of dollars lobbying that this effort will not in some way position them to gain a competitive advantage over the small businesses and community banks with whom they compete. I don’t think our concerns have been too far fetched, as the conclusion of the report referenced above is that large retailers will “benefit from a significant windfall at the expense of these small merchants, community banks and consumers”.

All of these issues are obviously beyond our control. We will continue to advocate for our clients’ best interest. The only practical advice for small businesses is to become more aware and educated on card processing.

• Supermarket Acceptance Development Program. This certification criteria will be eliminated and all merchants processing under MCC 5411 (Grocery Stores, Supermarkets) may qualify for the Supermarket interchange rates. 
• Warehouse Acceptance Development Program. This registration requirement will be eliminated. In order to qualify for the warehouse Interchange rate, MasterCard will require the merchant to have: 1) an annual MasterCard processed volume of more than USD 1 billion, and 2) a merchant membership program that entitles certain merchant customers who enroll in the merchant program (the “Club Members”) special access to the merchant retail facilities and/or discounted pricing for such club members on certain merchant offerings.  All merchants processed under MCC 5300 (Wholesale Clubs) that meet the above criteria may qualify for the Warehouse Interchange rates.

• Travel Industries Premier Services Program (TIPS). This registration requirement will be eliminated.  MasterCard will restructure the current TIPS Interchange rate into a consolidated rate for all Lodging, Auto Rental, and Cruise Line MCCs. As part of this consolidation, these MCCs will now be blocked from the Merit 3, Merchant UCAF, and Full UCAF rates. The Travel Industries Premier Services rates will be renamed Lodging and Auto Rental.  All merchants processed under MCCs 3501-3999, 7011 Lodging; 3351-3500, 7512, 7513, 7519 Automobile/Vehicle Rental; 4411 Cruise Line/Steamship may qualify for the new Lodging/Vehicle Rental/Cruise Line interchange rate.
• Service Industries Incentive Program (SIIP). This registration requirement will be eliminated.  The requirement that the transaction be a Recurring Payment has not been eliminated and transactions must continue to meet the requirements of a recurring payment as under the Service Industries rates.  All merchants processed under MCC 4814 (Telecommunications Services), 4899 (Cable, Satellite and Other Pay Television and Radio Services) may qualify for the recurring payment Service Industries rates.

MasterCard will introduce a new Interregional Consumer Super Premium Interchange.

MasterCard will increase the Assessment Fee by 0.01 percent (from 0.11 to 0.12 percent) on Consumer and Commercial credit volume only for transactions of USD $1,000 or greater. Assessment applies to all purchases including cash advance purchase and purchase with cash back.

MasterCard is creating a Supermarket “Super Tier” Interchange structure for which only the largest volume merchants can qualify.

MasterCard is introducing new Interchange categories for Commercial, World Business, World Elite Business, World Corporate, World Elite Corporate and Enhanced Value.

MasterCard will lower its Debit Premier Travel Cruise Lines, Hotel and Car Rental rates. MasterCard Consumer Credit will also see changes. World Merit III will increase 4 basis points, Supermarket base rate will increase 5 cents. Other Supermarket and Warehouse Club rates will change as well. Consumer Credit Premier Travel Cruise Lines, Hotel and Car Rental will be reduced by 10 basis points.

Visa has announced that it will make changes to Interregional Interchange Fee Programs effective with the April 15, 2011 spring compliance release.  These changes include aligning Interchange fees with existing fee edits for Chip Full Data and Electronic Interchange Fee Programs plus changes to the Interregional Premium Card Interchange Fee Program and adding a New Interregional Super Premium Card Interchange Fee Program.

Accel

Accel has announced a modification to the PINless Maximum Premium Rate from $1.73 to $1.78.

AFFN

• Retail merchants will be billed at 0.75% + $0.185 per transaction with a maximum transaction fee of $0.835.
• Supermarket merchants will be billed at $0.235 per transaction.
• Major merchants will be billed at 0.60% + $0.135 per transaction with a maximum transaction fee of $0.535.
• A new interchange level for QSR is being implemented at 1.25% + $0.16 per transaction with a maximum transaction fee of $0.485.

STAR

• Retail merchants will be billed at 0.80% + $0.2275 per transaction.
• Supermarket merchants will be billed at $0.3175 per transaction.
• Retail Premium transactions will be billed at 0.80% + $0.3025 per transaction.
• Medical Retailer Premium transactions will be billed at 1.20% + $0.3175 per transaction.
• Small Ticket Premium transactions will be billed at 1.25% + $0.2675 per transaction.
• Quick Service Restaurant (QSR) Premium transactions will be billed at 1.25% + $0. 2675 per transaction.
• Supermarket Premium transactions will be billed at $0.3925 per transaction.
• Petroleum Premium transactions will be billed at 0.80% + $0.2475 per transaction.
• PINless Premium transactions will be billed at 0.65% + $0.2475 per transaction.
• PINless Maximum Premium transactions will be billed at $2.1175 per transaction.

Accel

Accel has announced modifications to their rate structure and will be adding a Premium fee to all markets. The current pricing remains unchanged for non-Premium activity. The Premium fees are as follows:

• Retail Premium transactions will be billed at 0.90% + $0.255.
• Quick Service Restaurant (QSR) Premium transactions will be billed at 1.20% + $0.215.
• Supermarket Premium transactions will be billed at $0.385.
• Petroleum Premium transactions will be billed at 0.85% + $0.205.
• PINless Utility Premium transactions will be billed at $0.69 per transaction.
• Premium transactions on All Other PINless activity will be assessed 0.80% + $0.28 per transaction with a maximum transaction fee of $1.73.

CU24

CU24 has announced a change to their Petroleum rate structure. The Petroleum Maximum fee, which was previously eliminated, will be added back at a rate of $10.02 per transaction.

Jeanie

Jeanie has announced a change to their Retail debit rate structure. The Retail Maximum fee, which was previously eliminated, will be added back at a rate of $10.04 per transaction.

Visa Easy Payment Service to replace existing rules, requirements and restrictions for transactions less than $25.Easy Pay Program combines the No Signature Required Program and the Small Ticket Program.

Visa Adds Merchants Eligible for Small Ticket Interchange. Effective October 2010 CPS/Small Ticket has been extended to most merchant category codes (MCCs). Most merchants will be eligible to qualify for the U.S. CPS/Small Ticket Interchange program. Current CPS/Small Ticket Interchange applies to transactions less than or equal to $15. The Visa Small Ticket Credit Interchange is 1.65% + $0.04 and the Visa Small Ticket Debit Interchange is 1.55% + $0.04.

The following MCCs are currently ineligible for both the CPS/Small Ticket Credit and Debit programs. However, with the October 2010 Enhancements release change, they will be eligible for the CPS/Small Ticket Credit program; however, they will continue to be ineligible for the CPS/Small Ticket Debit program.

• 5411 — Grocery Stores and Supermarkets
• 5499 — Miscellaneous Food Stores: Convenience Stores and Specialty Markets

Also, with this change, merchants that participate in the following MVV programs may submit transactions that meet the CPS/Small Ticket program:

• CPS/Retail Performance Threshold program
• Utility program
• Debt Repayment program
• Visa Partner Program
• Debit Tax program
• GSA G2G (Government-to-Government)

Transactions made through merchants eligible for the Visa CPS/Retail and Supermarket performance threshold Interchange programs will not be eligible for the CPS/Small Ticket Interchange program.

Discover Discover has announced Assessment fee increases on Discover International Processing Fee from 0.30% to 0.40% and Discover International Service Fee from 0.45% to 0.55%.

Discover Assessment Fees will increase to 0.10% + $0.0185.

Discover is introducing a Premium Plus Consumer Interchange program.

• Retail merchants will be billed at 0.90% + $0.1625 per transaction with a minimum transaction fee of $0.2525.
• Retail Premium transactions will be billed at 0.90% + $0.2225 per transaction with a minimum transaction fee of $0.3125.
• Quick Service Restaurant (QSR) merchants will be billed at 1.25% + $0.0425. Both the minimum and maximum transaction fees have been eliminated.
• Quick Service Restaurant (QSR) Premium transactions will be billed at 1.25% + $0.0825.
• Supermarket merchants will be billed at 0.90% + $0.1825 per transaction with a minimum fee of $0.2525 and a maximum fee of $0.3325.
• Supermarket Premium transactions will be billed at 0.90% + $0.2425 per transaction with a minimum fee of $0.3125 and a maximum fee of $0.3925.
• Petroleum merchants will be billed at 0.85% + $0.1425 per transaction with a minimum fee of $0.2625 and a maximum fee of $0.8925.
• Petroleum Premium transactions will be billed at 0.85% + $0.2025 per transaction with a minimum fee of $0.3225 and a maximum fee of $0.9525.
• PINless Utility merchants will be billed at $0.6050 per transaction.
• PINless Utility Premium transactions will be billed at $0.6550 per transaction.
• PINless Education merchants will be billed 0.75% + $0.205 per transaction with a maximum transaction fee of $2.005.
• PINless Education Premium transactions will be billed 0.75% + $0.255 per transaction with a maximum transaction fee of $2.055.
• PINless Cable merchants will be billed at 0.70% + $0.205 per transaction and the maximum transaction fee has been eliminated.
• PINless Cable Premium transactions will be billed at 0.70% + $0.255 per transaction with no maximum fee.
• All Other PINless activity will be billed 0.60% + $0.205 per transaction and the maximum transaction fee will be increased to $1.005.
• Premium transactions on All Other PINless activity will be billed 0.60% + $0.255 per transaction and the maximum transaction fee will be increased to $1.055.

The debit networks Credit Union 24 (CU24) and Jeanie have announced several changes to their debit network pricing effective August 1, 2010.  The changed fees are as follows:

CU24

• Retail and Drugstore merchants will be billed at0.85% + $0.19 per transaction with a maximum transaction fee of $0.83.
• Quick Service Restaurant (QSR) merchants will be billed at 1.25% + $0.06 per transaction with a maximum transaction fee of $0.73.
• Supermarket merchants will be billed a total of $0.305 per transaction.
• Petroleum merchants will be billed at 0.75% + $0.21 per transaction and the maximum transaction fee has been eliminated.
• Returns will now be billed at $0.03 per transaction.
• All other fees remain the same.

Jeanie

• Retail merchants will be billed at 0.80% + $0.235 per transaction and the maximum transaction fee has been eliminated.
• Quick Service Restaurant (QSR) merchants will be billed at 1.25% + $0.19 per transaction with a maximum transaction fee of $0.79.
• Supermarket merchants will be billed a total of $0.40 per transaction.
• All other fees remain the same.

July 2010

Visa has announced an increase on the Visa Assessment fee. The Assessment fee will be changing from .0925% to .11% effective July 1, 2010.

Visa has announced changes to their No Signature Required (NSR) program. Effective July 2010, the NSR program has been extended to most merchant category codes (MCCs). Transactions on U.S. issued cards of $25 or less from most all MCCs will be eligible to qualify for the NSR program.

MCCs excluded from Visa's NSR program include: Wire Transfer Money Orders, Automated Fuel Dispensers, Direct Marketing - Insurance Service, Direct Marketing - Travel-Related Arrangement Services, Direct Marketing - Catalog Merchants, Direct Marketing - Combination Catalog and Retail Merchants, Direct Marketing - Outbound Telemarketing Merchants, Direct Marketing - Inbound Telemarketing Merchants, Direct Marketing - Continuity/Subscription Merchants, Direct Marketing/Direct marketers (not else classified), Financial Institutions - Manual Cash Disbursements, Financial Institutions - Automated Cash Disbursements, Intra-Government Purchases.

• Merchants are not required to provide a transaction receiptautomatically.
• A cardholder may request a transaction receipt, if necessary
• Merchants must provide transaction receipts upon request

June 2010

Effective June 1, 2010, PULSE is implementing a “PULSE Pay Choice” fee.

This Premium mark-up by each Network is an additional incentive paid to Issuing Banks that commit a specific amount of card issuing volume to a network. The Premium Fee will only be passed on transactions where the card belongs to a qualifying Issuer. The volume is estimated to be between 15% and 50% for each of the three networks. This is an additional per item fee assessed on top of the regular debit network fees. The rates are as follows:

• The NYCE Premier Issuer Fee is an additional $0.011 per item, effective April 1, 2010
• The ALL-STAR Fee is an additional $0.025 per item, effective April 1, 2010
• The PULSE Pay Choice Fee is additional $0.05 per item, effective June 1, 2010

Effective April 1, 2010, NYCE is implementing a “Premier Issuer” fee and STAR is implementing an “All STAR” fee.

May 2010

The debit networks Accel and Pulse have announced several changes to their debit network pricing effective May 1, 2010.  The changed fees are as follows:

Accel

• Retail merchants will be billed at 0.80% + $0.21 per transaction with no maximum fee per transaction.
• Quick Service Restaurant (QSR) merchants will be billed at 0.95% + $0.18 per transaction and the maximum fee for QSR transactions has been eliminated.
• Supermarket merchants will be billed a total of $0.31 per transaction.
• Petroleum merchants will be billed at 0.80% + $0.19 per transaction with no maximum transaction fee. These transactions were previously bundled with Retail and will now post separately.
• PINless Utility merchants will now post separately from regular PINless and will be billed a total of $0.660 per transaction.
• All other PINless transactions will be billed at 0.75% + $0.21 per transaction with a maximum transaction fee of $1.28.

Pulse

• Retail merchants will be billed at 0.86% + $0.21 per transaction with no maximum fee per transaction.
• Supermarket merchants will be billed a total of $0.345 per transaction.
• Petroleum merchants will be billed at 0.71% + $0.21 per transaction with a maximum transaction fee of $1.03.These transactions were previously bundled with Retail and will now post separately.
• PINless Utility merchants will be billed a total of $0.755 per transaction.
• All other PINless transactions will be billed at 0.80% + $0.27 per transaction.

MasterCard is introducing new Interregional Interchange programs. A unique brand product classification has been defined for each of the consumer credit, debit, and commercial product families. The following brand products will qualify for the new Interregional Consumer Premium Interchange Structure.

• MasterCard World Card
• MasterCard World Elite
• World MasterCard for Business
• MasterCard Corporate World
• World Elite MasterCard Business
• MasterCard Corporate World Elite

Business Data Rate programs fees have been modified for both World and World Elite categories.

MasterCard is revising the qualification criteria for Commercial Face to Face and Commercial Data Rate II. Effective April 2010, zero will no longer be accepted as a valid tax value to qualify for these rate categories. Only non-zero tax values that fall within the specified valid range will be accepted. Therefore, if a commercial transaction has no sales tax, the transaction will downgrade to a lower Interchange level.

MasterCard is adding a new Interchange program for MasterCard Enhanced Small Business. The following card programs will be supported in the U.S. Small Business Sector:

• MasterCard BusinessCard Card
• MasterCard Professional Card
• MasterCard Executive BusinessCard Card

MasterCard Pay with Rewards Service This service provides cardholders with the ability to redeem their loyalty points as currency to pay for purchases at any merchant where MasterCard-branded payment cards are accepted. The cardholder will use a separately issued “redemption card,” which will be a MasterCard debit product, to initiate points redemption transactions at the POS. Participating card issuers will register redemption cards into the MasterCard Pay with Rewards service. At the time of redemption, a Pay with Rewards cardholder will present his or her redemption card as any other payment card today.

New Interchange Fees for Pay with Rewards (Consumer Core, Consumer Debit, Consumer World and Commercial) will start out at 0.90% + $0.00

Visa

Visa is implementing modifications to the No Signature Required program:

• MCC 5993 (Cigar Stores/Stands) is being added as an eligible MCC
• Standardize amount to equal to or less than US $25.00 to be eligible.
• Transaction with cash back amounts will not be eligible.

Visa will adjust the following U.S. Visa Debit Interchange reimbursement fees.

Interlink PIN Debit

Visa has announced changes in the pricing for Interlink debit transactions.

NYCE PIN Debit

• NYCE will implement a Premier Issuer fee of $0.011 per transaction. This will be an addition to the existing interchange fees.

• Retail merchants will be billed at 0.80% + $0.2125 per transaction. The maximum transaction fee is being eliminated.
• Quick Service Restaurant merchants will be billed at 01.25% + $0.1925 per transaction. The maximum transaction fee is being eliminated.
• Petroleum merchants will continue to be billed at 0.80% + $0.1725 per transaction however the maximum transaction fee is being eliminated.
• Supermarket merchants will be billed at $0.3025 per transaction
• Medical Retailer merchants will be billed at 1.20% + $0.2425 for each transaction equal to or less than $15.00. Transactions over $15.00 will be assessed the standard Retail rates.
• Small Ticket Retailer merchants will be billed at 1.25% + $0.1925 for each transaction equal to or less than $10.00. Transactions over $10.00 will be assessed the standard Retail rates.
• PINless transactions will continue to be billed at 0.65% + $0.1725 per transaction. The maximum transaction fee is being increased to $2.0425.

• The switch fee will be decreased from $0.05 to $0.0425.
• Retail merchants will be billed at 0.75% + $0.2125 per transaction. The minimum transaction fee will be decreased to $0.3025.
• Quick Service Restaurant merchants will be billed at 0.55% + $0.1075 per transaction with a maximum fee of $0.5425. The minimum transaction fee will be decreased to $0.2275.
• Supermarket merchants will be decreased to $0.3025.
• Petroleum merchants will be billed at 0.85% + $0.1925 per transaction. The minimum transaction fee will be decreased to $0.3025.
• Returns will be decreased to $0.0425 per transaction.
• PINless Utility merchants will be billed at $0.6550 per transaction.
• PINless Cable merchants will continue to be assessed 1.00% + $0.125 per transaction. The maximum transaction fee will be increased to $1.055.

CU24 PIN Debit

• The switch fee will be increased from $0.025 to $0.028.
• Retail merchants will be billed at 0.75% + $0.178 per transaction with a maximum fee of $0.828
• Quick Service Restaurant merchants will be billed at 1.25% + $0.058 per transaction with a maximum fee of $0.478.
• Supermarket merchants will now be billed $0.258 per transaction.
• Drug Store and Pharmacy merchants will be billed at 0.75% + $0.178 per transaction with a maximum fee of $0.828
• Petroleum merchants will be billed at 0.75% + $0.168 per transaction with a maximum fee of $0.728
• Returns will now be billed $0.028 per transaction

Accel

• The maximum fee for Retail transactions has been eliminated . 

Jeanie

• Retail transactions will be billed at 0.80% + $0.20 per transaction with a maximum fee of $0.80.
• Supermarket merchants will now be billed a total of $0.35 per transaction.

Maestro

• Retail transactions will be billed at 0.90% + $0.175 per transaction with no maximum fee.
• Quick Service Restaurant transactions will be billed at 0.75% + $0.195 per transaction with a maximum fee of $0.975.
• Supermarket merchants will now be billed 1.05% + $0.175 per transaction with a maximum fee of $0.375.
• Cross-Border transactions will be billed at 1.60% + $0.025 per transaction with no maximum fee.

Program Support Fee (previous 0.45%, increasing to 0.55%), and the Cross Border fee (previous 0.30%, increasing to 0.40%), as these fees apply to US merchants settling International transactions in USD. 

MasterCard is modifying the World Elite Restaurant and the High Value Restaurant Interchange rate programs significantly.

MasterCard is slightly lowering Interregional POS Consumer interchange rates and expanding its Utilities program to Business Cards. with the addition of Interchange categories for Business Utilities, Business World Utilities, and Business World Elite Utilities.

Visa will assess an International Acquirer fee (IAF) to U.S. Acquirers. Impact is expected to be limited. Only Visa International transactions will be assessed the 0.45% IAF fee. 

Visa announced the implementation of fees for transactions that do not match authorization items to settlement items. 

• The Misuse of Authorization System Fee – There will be a fee assessed for transactions in which an approval authorization is obtained, but there is no matching settled transaction or authorization reversal. (A merchant obtains an approval code and doesn't use it, Visa will assess a $0.045 per occurrence.  This fee will be effective October 2009.)

The Misuse of Authorization System fee only refers to authorizations that do not have corresponding settled transactions.  Merchants may process an Auth Only with the forced transaction processed a few days later (the original authorization is subsequently used).  Note: The auth amounts and settled amounts do not have to match. 

Misuse of Authorization fees are assessed on approved or partially-approved authorization transactions that cannot be matched to a clearing (settled) transaction or an authorization reversal.  Clearing must occur within 10 days of authorization for all merchant categories, with the exception of T&E segments, which must clear transactions within 20 days of authorization, regardless of the transaction date. Visa implemented this penalty fee to reduce the occurrence of "ghost authorizations" (authorizations that are approved but never cleared), as these can adversely impact a cardholder's open-to-buy, leading to increased declines and confusion at the point of sale. To clarify, authorization reversals will only occur for a cancelled sale, or a timeout.  An authorization reversal cannot be manually processed by the merchant.

Visa Operating Regulations allow for $1 status check transactions for automated fuel dispenser and select lodging merchants, but other merchants must utilize the $0 account verification message.

• Zero Floor Limit Fee – There will be a fee assessed for transactions in which a settled transaction can not be matched to an approved authorization.

{A merchant settles a transaction without a valid approval code (makes up an approval code), Visa will assess a $0.10 per occurrence.  This fee will be effective October 2009.}

Visa has made a modification to the Account Verification Service (AVS) fee. Visa is now charging $0.025 on AVS only transactions. AVS only transactions are considered Zero Dollar Account Verifications as this type of transaction occurs when no authorization is requested or obtained.

Discover has introduced a new International Processing Fee and an International Service Fee.

• The International Processing Fee will be processed on all transactions, including Cash Advance, conducted at a merchant location in a country other than the country that the card was issued in.
• The International Service Fee will be assessed on transactions conducted at a merchant location in the United States where the issuer of the card is in a country other than the United States. 

Discover has also introduced International Interchange rate categories and made modifications to several categories including increasing Consumer Core, Rewards, Premium Mid and Base and Commercial Base rates by 10 basis points.

Effective in October 2009, merchants in the U.S. and designated U.S. territories that accept the Discover card will be enabled to accept JCB and Diners Club cards under the Discover network.  JCB and Diners Club transactions will be processed at your Discover rate.

American Express Effective October 1, 2009 the American Express Monthly Flat Fee will increase to$7.95 per month. Monthly Flat Fee is mandatory (regardless of estimated Charge Volume) for these industries: Internet-Physical Delivery merchants; Mail Order/Telephone Order; Home Based Businesses.

Shazam Debit Network

• Retail transactions will be billed at 0.75% + $0.19 per transaction which is a decrease from the current rate of 0.75% + $0.20 and there will no longer be a maximum per transaction fee. 
• Quick Service Restaurant and Small Ticket merchants will be billed at 1.25% + $0.09 per transaction and there will no longer be a maximum per transaction fee. 
• Petroleum merchants will be billed at 0.75% + $0.17 per transaction and there will no longer be a maximum per transaction fee. 
• All other fees remain the same.

• There will be a new Petroleum category (MCC 5541 and 5542) with a debit rate of 0.85% + $0.20 per transaction with a minimum rate of $0.31 per transaction.
• Standard (Retail) transactions will now be assessed a minimum rate of $0.31 per transaction.
• QSR transactions (MCC 5814) will now be assessed a minimum rate of $0.235 per transaction.
• All remaining fees for NYCE transactions remain the same.

These transactions will be billed at the rate of 1.40% + $0.025 per transaction. Maestro cross-border transactions are those Maestro transactions in which the cardholder's Maestro card is issued in a country other than the country in which the merchant is located. All other Maestro transactions will remain unchanged.

Effective June 1, 2009, the generic rate for an unidentified debit card transaction will be increased to a rate of 0.75% + $0.19 per transaction with no maximum fee.

In addition, effective as of the same date, ACCEL has announced changes to their debit network pricing.  As a result of these changes, the following new fees will take effect:

• Retail merchants will now be billed at 0.75% + $0.18 per transaction with a new maximum fee of $0.73.
• Grocery merchants will now be billed at $0.28 per transaction. 
• All remaining fees for ACCEL transactions remain the same.

Small Ticket Interchange Rates to Service Stations when the transaction size is $15.00 or less. Visa will modify Interlink Interchange fees including the establishment a unique Interlink interchange category for Automated Fuel Dispenser (AFD) and Service Station transactions.

MasterCard will modify commercial Interchange rates. Some higher, some lower. The goal of these changes are unclear. MasterCard will launch the availability for issuers to enroll Consumer World accounts in the "World High Value" program to qualify for differentiated interchange. As of April 2009, Interchange rates for the new category will mirror those currently used for the Consumer World Elite cards, so there will be no immediate impact of this launch. In an upcoming April 2009 initiative, the MasterCard Acquirer Access fee that is currently in place and being billed at a pass through cost of $0.005 per authorization is being eliminated and replaced with Network Access and Brand Usage (NABU) fee which will be billed at a pass through cost of $0.0185 per item. This MasterCard change will greatly impact merchants with small transaction sales.

Debit

AFFN debit network has announced changes to their debit network pricing structure effective March 2009.

• Retail transactions will now be billed at 0.65% + $0.155 per transaction with a new maximum fee of $0 .535 per transaction.
• Major merchants will now be billed at 0.50% + $0.10 per transaction with a new maximum fee of $0.435 per transaction.
• Grocery merchants will now be billed at $0.205 per transaction.
• Returns will now be assessed at $0 .035 per transaction.

Interlink has announced an increase to their Retail per transaction rate.  As a result of these changes, Retail merchants will now be charged 0.75% + $0.205 per transaction with no maximum fee. Interlink is also creating a new category for Petroleum Fuel.  These merchants will be charged 0.70% + $0.205 per transaction with a maximum fee of $0.985 per transaction. 

Pulse has announced a rate increase effective April 1, 2009. The changes are as follows:

• The Switch Fee is increasing from $.07 to $.08 Per Item for all PIN based activity and from $.06 to $.07 for all PINless activity.
• Retail & Petroleum transactions will now be billed a total of 0.75% + $0.18 per transaction.
• Grocery merchants will now be billed a total of $0.30 per transaction.
• Returns will now be billed at $.08 per transaction.
• PINless Utility will be billed at $0.665 per transaction; all other PINless activity will now be billed 0.80% + $0.16 per transaction with no maximum.

• The STAR PINless debit interchange rate will remain at 0.65% + $0.14, with an updated maximum rate of $1.01 per item.  The associated break-even amount is $133.85. 
• The STAR Petroleum interchange rate will change to 0.80% + $0.14 per item, with an updated maximum rate of $0.71 per item.  The associated break-even amount is $71.25.

Changes are scheduled  to the pricing  of the NYCE and STAR debit networks.

NYCE – Effective January 1, 2009

• The Switch Fee is increasing from $.0375 to $.05 Per Item. This impacts the following pricing categories: 
• Retail transactions will be billed at 0.75% + $0.20 per transaction and there will no longer be a maximum per transaction fee.
• Quick Service Restaurant merchants will be billed at 0.55% + $0.115 per transaction with a maximum of $.55 per transaction.
• Grocery merchants will now be $0.31 per transaction.
• Returns will now be billed at $.05 per transaction.

STAR – Effective February 1, 2009

• Petroleum merchants will now be charged .80% + $0.1725 per transaction with a maximum transaction fee of $0.7425.
• PINless Bill Payer transactions have a new maximum fee of $1.0425 per transaction.

• Grocery and Warehouse merchants will be billed $0.28 per transaction.
• All other retail transactions will continue to be billed at 0.75% + $0.175 per transaction however there will no longer be a maximum per transaction fee.

MasterCard's Maestro PIN debit is eliminating the QSR and Retail Maximum rate categories. MasterCard has also announced that effective April 1, 2009 US PIN Debit POS Interchange rates will apply to the total transaction amount, including cash-back amounts.

Visa

Visa has announced a New Government-to-Government (G2G) Program

Visa's new Government-to-Government (G2G) program will be available as of October 3, 2008. With this program, Visa will implement a new Interchange rate for purchases made at qualifying governmental agencies.

This new program will be limited to government purchases on GSA Purchasing Cards. Visa will implement changes to allow qualifying GSA Purchasing Card transactions, including GSA Purchasing Fleet, from participating government merchants to receive a new GSA G2G fee program rate of 1.65% and 10 cents. As a result of this new program, the existing program GSA Large Ticket interchange rate will be adjusted to 1.20% + $39 and the minimum transaction amount of $5000 for GSA Large Ticket will be removed. There are no requirements to submit Purchasing Card Level 2 or Level 3 data.

Please note that registration is required for the new G2G program. To participate in the Visa Government-to-Government (G2G) Program, the government merchant must register and meet eligibility requirements and transactions must include an MCC (Merchant Category Code) of 9399 or 9402 (Government Services or Government Postal Services).

Visa launches the Visa Tax Payment Program

Visa has announced a new incentive program and Interchange rate for qualified tax payments to take effect October 4th 2008. The Visa Tax Payment Program allows eligible government taxing authorities, or parties acting on their behalf to assess cardholder fees on approved tax types in the card-present, card-not-present and recurring tax payment environments.

The Visa Tax Payment Program allows a fixed convenience fee—not to exceed $3.95—for Visa consumer debit products and a variable service fee solution for Visa consumer credit and commercial products. As a reminder, all fees must be clearly disclosed to the cardholder in advance of payment. The service/convenience fee charged for a Visa transaction must not be greater than any fixed or flat fee charged for a transaction with any other payment card. Please note that if a merchant chooses to discontinue accepting Visa Debit due to the $3.95 convenience fee cap, then a Limited Acceptance Registration will be required.

The program also offers an incentive Interchange rate to participants on consumer debit tax payments. To receive the consumer debit tax payment interchange rate, both the tax payment transaction and the convenience fee transaction must be CPS-qualified. Visa is not introducing new interchange rates for credit or commercial tax payments. To receive the most favorable interchange rate, all credit/commercial transactions also must be CPS-qualified. The tax payment and fee transactions must be submitted and processed as two separate transactions.

Registration in the Visa Tax Payment Program is required for all participants. Current Mercants will be automatically enrolled. Tax payment transactions must include an MCC of 9311 (Merchant Category Code). Only federal and state income, federal and state small business, and personal real estate and other property tax payments are eligible for the program. Licenses, fees, registrations and other government payments are not eligible. For clarification of any issue related to eligibility status of a particular merchant, please contact us.

Healthcare Auto-Substantiation

Effective January 1, 2009, the IRS requirement for an IIAS will be extended to include merchants with a pharmacy or drug store merchant category code (MCC). An IIAS is an inventory system that identifies at the point of sale over the counter (OTC) healthcare products that under IRS guidelines are eligible for purchases made with FSA and HRA funds. The eligible medical expenses are totaled and inserted in a designated field in the authorization request message and sent to the card issuer's system. The issuer can then approve the eligible healthcare amount in the purchase, subject to coverage under the cardholder's health plan, such as the type of coverage provided, and whether the cardholder is a covered participant. Merchants of OTC healthcare products have the option of developing their own IIAS, or using a third-party solution.

Discover

Discover Network has announced new pricing to take effect in October and November 2008. They have broken their changes into two distinct effective dates.

Effective October 3, 2008, three new interchange programs will be introduced: Real Estate, Insurance, and Commercial Utilities.

Effective November 1, 2008, pricing changes will take place to some existing programs for both the Discover Core and Rewards product offerings including Retail, Restaurants, Hotel, and Card-Not-Present merchants.

PIN Debit Credit Union 24 (CU24) and Jeanie debit networks effective October 1, 2008.

CU24

• Quick Service Restaurant merchants will continue to be billed 1.25% + $0.045 per transaction with a new maximum fee of $0.475 per transaction.
• Drug store and Pharmacy retailers will be billed 0.75% + $0.145 per transaction with a maximum fee of $0.775.
• Petroleum merchants will be billed 0.65% + $0.145 per transaction with a maximum fee of $0.525.
• Grocery merchants will be billed $0.23 per transaction.
• All other retail transactions will be billed 0.75% + $0.145 per transaction with a maximum fee of $0.775.

Jeanie

• Quick Service Restaurant merchants will be billed 1.25% + $0.07 per transaction and a maximum fee of $0.54 per transaction will now apply.
• Grocery and Warehouse merchants will be billed $0.29 per transaction.
• All other retail transactions will continue to be billed at 0.75% + $0.20 per transaction with a new maximum fee of $0.75 per transaction.

July 2008 Update

Visa's fuel transaction qualification and maximum Interchange enhancements where announced in the Visa Business Enhancements News dated June 27, 2008.  Visa is changing the maximum allowed transaction amount for the CPS/Automated Fuel Dispenser (AFD) Interchange program for consumer credit and debit transactions from $75.00 to $125.00.  Visa is also implementing a new maximum Interchange amount of $0.95 for debit fuel transactions from MCCs 5541 and 5542 that qualify for the EIRF, CPS/AFD, or CPS/Retail Service Station interchange programs.

May 2008 Update

Effective May 1, 2008, the Pulse Debit Network will implement several changes to its pricing structure including the addition of a new Network Security Fee of 0.01% and establish a new category for Petroleum merchants.

Visa

Visa is implementing an International Service Assessment (ISA) fee on U.S. acquired transactions when the issuer country is foreign for both international purchase and cash advance transactions except on a U.S. military base, embassy or consulate.

Visa will modify Visa Signature Preferred card Interchange for Card Not Present (CNP), Retail and Corporate Electronic charge types as well are certain credit voucher rates.

Changes to the No Signature Required Program (US issued card transactions less than $25), which provides chargeback protection on eligible transactions for fraudulent transactions in a card present environment, is being expanded to include Supermarket Credit and Debit plus:

• hardware stores
• dairy product stores
• gift, card novelty and souvenir shops
• variety stores
• candy, nut and confection stores
• bakeries
• book stores

PIN Debit Visa will implement changes to Interlink Supermarket and Interlink Standard rates.

Effective April 1, 2008, the following debit networks will modify their price structures as follows:

• Alaska Option will increase their transaction fee to $0.26 per transaction.
• Jeanie Debit Network will increase retail transactions to $0.20 + 0.75% per transaction, Quick Service Restaurant transactions to $0.17 per transaction, and Supermarket transactions to $0.28 per transaction.

MasterCard MasterCard is enhancing systems to recognize Puerto Rico and other U.S. territories so transactions between merchants and cardholders will not longer be subject to cross border fees.

In an effort to penetrate growing market segments, MasterCard is introducing new incentive Interchange rates, including Core, Enhanced, World, World Elite and Debit Interchange, to apply to Insurance and Real Estate merchant categories.

To further growth in the Bill Payment market segment, MasterCard is reducing the Interchange rates associated with most consumer credit Utility transactions. Core, Enhanced and World Utilities Interchange will decrease by $0.10 and Debit Utilities will drop by $0.30.

MasterCard is requiring that Vehicle Rental transactions being submitted for Commercial T&E Rate III must include the Rental Rate with their current addendum detail.

MasterCard is requiring that transactions qualifying for Commercial Data Rate II and Commercial Face-to-Face Interchange programs include a non-zero tax amount that is within a range of 1% to 30% of the transaction amount, unless the transaction is presented as 'tax exempt' or as 'tax not collected'. Processor will populate a 'tax exempt' indictor when tax amount is equal to zero to safe guard against potential downgrades.

Discover Effective April 4th, Discover is reducing the timeliness for all Prime Submission Level programs by 1 day. Timeliness refers to the number of days from when a transaction is processed until it is submitted through Interchange to Discover (most industries set at 2 days). Your best practice is to settle daily.

Also effective April 4th, Discover is increasing Supermarket rates by +0.05%, decreasing Debit Express Services Interchange by -0.05%, increasing Debit Petroleum by +0.02% and Commercial Electronic by +0.04%.

Also effective January 1, 2008, MasterCard will increase its Acquirer Program Support Fee which is assessed on International Interchange categories. Merchants accepting International cards may notice a slight increase in the effective costs of Interchange of 0.15% (15 basis points), however, these categories will continue to be price lower than domestic card Interchange.

PIN Debit Debit networks, Shazam and ACCEL, have announced changes. Effective January 1, 2008, Shazam will add Quick Service Restaurant (QSR), Small Ticket Retailer, Petroleum, Retail Max, QSR Max charge types and increase Retail and Grocery transactions. Effective February 29, 2008, ACCEL debit network will increase their Retail Max, Grocery, QSR and QSR max fees.

Visa

Visa is expanding its CPS Small Ticket program to include transactions processed from unattended terminals. Visa is also expanding their Utility program to include Business Card transactions. Visa is updating MCC 7841 from Video Tape Rental stores to DVD/Video Rental. Visa will begin to enforce the Card-Level value is included with transactions.

MasterCard

MasterCard is breaking out Level II and Face-to-Face commercial transactions for Business Card, Purchasing Card, Fleet & Petroleum categories. Corporate Standard, Data Rate II and Face-to-Face rates will increase for Commercial, World, World Elite, World Corporate, and World Elite Corporate. Data Rate III Interchange for these categories will decrease.

MasterCard Cross Border Assessment Fee Changes effective January 1, 2008, the cross border transaction assessments are being increased from .10% to .30%. This card type / charge type accommodates transactions where the acquirer settles the transaction using the merchant’s currency code. For US merchants settling in US$, then we expect this to be the impact to your pricing.

Visa

Visa will introduce three additional interchange rates within the commercial card products structure: Business-to-Business (B2B), Retail and Card Not Present (CNP). While all three are within the commercial card rate structure, these rates will vary dependant upon they type of card (Purchasing, Business or Corporate). Interchange qualification for transactions from T&E merchants remains unchanged and T&E merchants are not eligible for any of the new rates; transactions from T&E merchants remain eligible for Commercial Electronic and Commercial Standard rates. Visa is also adjusting existing commercial card rates and introducing Visa Commercial Signature Preferred Interchange. All transactions must comply with applicable qualification and processing requirements.

Business-to-Business: Transactions eligible for the B2B rate must be CPS qualified (not qualifying for Level 2 rates) and be processed by merchants operating in qualified Merchant Category Codes (MCCs). Transactions with the qualifying MCCs can be face-to-face or accepted in a card not present environment. Visa considered many factors when selecting the eligible MCCs including, but not limited to, fostering growth in under-penetrated market segments and providing a lower rate for merchants in these categories as they tend to have higher degrees of commercial spending versus consumer spending. Visa will review MCC eligibility periodically to ensure that the appropriate categories are targeted and aligned with the goals of increasing Visa acceptance and fostering growth in Visa volume. The eligible MCCs are:

• 780 Landscaping and Horticultural Services
• 1799 Special Trade Contractors – Not Elsewhere Classified
• 2741 Miscellaneous Publishing and Printing
• 2791 Type Setting, Plate Making and Related Services
• 2842 Specialty Cleaning, Polishing and Sanitation Preparations
• 4214 Motor Freight Carriers and Trucking – Local & Long Distance, Moving & Storage Companies & Local Delivery Services
• 5021 Office and Commercial Furniture
• 5039 Construction Materials – Not Elsewhere Classified
• 5044 Photographic, Photocopy, Microfilm Equipment and Supplies
• 5046 Commercial Equipment – Not Elsewhere Classified
• 5047 Medical, Dental, Ophthalmic and Hospital Equipment & Supplies
• 5051 Metal Service Centers and Offices
• 5065 Electrical Parts and Equipment
• 5074 Plumbing and Heating Equipment and Supplies
• 5085 Industrial Supplies – Not Elsewhere Classified
• 5099 Durable Goods – Default – Not Elsewhere Classified
• 5131 Piece Goods, Notions and Other Dry Goods
• 5137 Men's, Women's and Children's Uniforms & Commercial Clothing
• 5139 Commercial Footwear
• 5169 Chemicals and Allied Products – Not Elsewhere Classified
• 5192 Books, Periodicals and Newspapers
• 5193 Florist Supplies, Nursery Stock and Flowers
• 5198 Paints, Varnishes and Supplies
• 5199 Non durable Goods – Not Elsewhere Classified
• 6300 Insurance Sales, Underwriting and Premiums
• 7311 Advertising Services
• 7333 Commercial Photography, Art and Graphics
• 7349 Cleaning, Maintenance and Janitorial Services
• 7361 Employment Agencies and Temporary Help Services
• 7372 Computer Programming, Data Processing and Integrated Systems Design Services
• 7375 Information Retrieval Services
• 7379 Computer Maintenance, Repair and Services – Not Elsewhere Classified
• 7392 Management, Consulting and Public Relations Services
• 7399 Business Services – Not Elsewhere Classified
• 7829 Motion Picture and Video Tape Production and Distribution
• 8734 Testing Laboratories (Non-Medical Testing)
• 8931 Accounting, Auditing and Bookkeeping Services
• 8999 Professional Services – Not Elsewhere Classified

Retail: Transactions eligible for the Retail rate must be CPS qualified (not qualifying for Level 2 rates), from merchants operating in Non-T&E MCCs and occur in a face-to-face swiped card environment.

Card Not Present (CNP): Transactions eligible for the Card Not Present rate must be CPS qualified (not qualifying for Level 2 rates), from merchants operating in non-T&E MCCs and occur in a non face-to-face keyed card environment.

Please note that if transactions eligible for the new B2B, Retail or CNP fail CPS qualification, the best rate they can qualify for is Commercial Electronic. Interchange qualification for transactions from T&E merchants remains unchanged and T&E merchants are not eligible for any of the new rates; transactions from T&E merchants remain eligible for Commercial Electronic and Commercial Standard rates. Visa Purchasing Large Ticket and GSA Large Ticket interchange rates remain unchanged as a result of these enhancements.

Visa Purchasing, Corporate and Business Interchange qualification best to worst:

Visa Purchasing Cards

1. Level 3 (CPS, Level 2, Level 3 data)
2. Level 2 (CPS, Level 2 data)
3. CNP, Retail, B2B (CPS data)
4. Purchasing Electronic (failed CPS)
5. Commercial Standard (exceeds timeliness)

Visa Corporate Cards

1. Level 3 (not eligible)
2. Level 2 (CPS, Level 2 data)
3. CNP, Retail, B2B (CPS data)
4. Corporate Electronic (failed CPS)
5. Commercial Standard (exceeds timeliness)

Visa Business Cards

1. Level 3 (not eligible)
2. Level 2 (CPS, Level 2 data)
3. CNP, Retail, B2B (CPS data)
4. Business Electronic (failed CPS)
5. Commercial Standard (exceeds timeliness)

MasterCard

In addition to pricing changes that will take effect in April 2007 and in June 2007, MasterCard is also introducing additional segmentation of its product suite in both the Consumer and Commercial card arenas.

Core Value and Enhanced Value Interchange

The MasterCard Enhanced Value platform applies to consumer credit cards that meet minimum rewards value requirements for cardholders. Consumer credit cards that do not meet minimum rewards value requirements will be recognized as consumer credit Core Value products and will be eligible to qualify for reduced interchange rates.

Each of the previously existing consumer credit card categories will now have rates associated with both a Core Value and Enhanced Value card. In April 2007, the interchange rates will be identical for these two products with few changes to the current pricing structure. You will also note that both Core Value and Enhanced Value pricing will change in June 2007 for eight of the categories listed. In addition, a Petroleum rate program is being introduced for both segments.

Consumer Credit World Interchange

MasterCard will be modifying interchange in April 2007 for several categories that fall under the Consumer Credit World Interchange programs as well as adding a Petroleum rate program in the Consumer Credit World Interchange Program.

Consumer Credit World Elite Interchange

This category was introduced by MasterCard in October 2006 with a rate structure identical to the existing World MasterCard rates. Effective in April 2007, changes will be made to eleven of the categories and a Petroleum rate program will be added to this segment.

Consumer Debit Interchange

MasterCard has elected to maintain all existing U.S. region Debit MasterCard interchange rate levels. Both of the existing Petroleum rate programs will now also have a maximum fee of $.95 in keeping with the newly introduced Petroleum rate programs in other segments. PIN Debit interchange will also remain unchanged at this time.

Commercial Interchange

MasterCard has also elected to maintain all existing commercial card interchange rates. In order to expand acceptance of Large Ticket transactions, two new Commercial Large Ticket rates will be introduced in April 2007.

In addition to the above mentioned changes to Commercial Interchange, MasterCard is also introducing the following commercial card programs: World MasterCard for Business, Corporate World MasterCard, and World Elite MasterCard for Business and MasterCard Corporate World Elite. Corporate World and Corporate World Elite rate programs will mirror Commercial Card rates but Business World and Business World Elite will have a separate rate structure.

Taxi and Petroleum Interchange

Also effective in April 2007, MasterCard is adding MCC 4121 (Limousines and Taxicabs) to the Consumer Credit Core Value, Enhanced Value, World and World Elite Convenience Purchases interchange rate programs for transactions that are less than or equal to $25.00.

MCC 5541 (Service Stations with or without ancillary services) and MCC 5542 (Fuel Dispenser, Automated) are being removed from the Consumer Credit, World and World Elite Convenience Purchases and Merit 3 interchange purchases but can now qualify for the new Consumer Credit Core Value, Enhanced Value, World and World Elite Petroleum interchange rates.

Please contact your Relationship Manager if you have any questions regarding these updates.

Visa Visa recently announced that they would provide access to Interchange rates for merchants. Visa Interchange rates are now publicly available on their web site atwww.visa.com/merchant. As discussed on this site, Interchange is a major component of your discount rate pricing.

MasterCard

MasterCard has defined a Zero Interchange Program under MasterCard's Business Service Arrangement. We would anticipate the need to use the zero interchange logic in the event of an exceptional circumstance that would warrant an immediate adjustment to merchant level fees, such as a natural disaster. To support this program, we will be adding a Zero Interchange Program Flag and will house a Zero Interchange Start Date and a Zero Interchange End Date. These dates will define the period of time for which interchange fees would not be applied to the eligible merchant.

MasterCard will be implementing Interchange fee programs and rates to support the launch of their new World Elite MasterCard program, which offers affluent cardholders enhanced services and rewards. While Interchange rates on the new World Elite programs currently mirror the existing MasterCard World Card programs.

MasterCard is introducing three new Interchange programs specifically for Utility merchants: Consumer Credit, World Utilities and World Elite Utilities. Eligible merchants must register with MasterCard to participate in this program. Transactions that meet qualification requirements will be assessed at a reduced Interchange fee.

MasterCard is changing how they recognize Puerto Rico, specifically when assigning the Cross-Border fee (established in April 2006). Puerto Rico is currently recognized as part of the U.S. region. Effective October, 2006, MasterCard will recognize Puerto Rico as part of the Latin America and Caribbean region. This change affects U.S. merchants accepting Puerto Rico-issued MasterCard credit cards.

MasterCard will require that U.S. merchants processing mail order / telephone order or recurring billing transaction include a customer service telephone number.

MasterCard is expanding its Small Ticket Interchange program to include seven additional merchant categories: Bus Lines, Tolls & Bridge Fees, News Stands, Laundries, Dry Cleaners, Quick Copy / Reproduction Services and Car Washes. This update will align the MasterCard Small Ticket program eligibility with Visa's Small Ticket program.

Visa is extending the existing CPS small Ticket Interchange, also known as Small Ticket Payment Service, to seven additional merchant category codes (MCCs). New additional eligible MCCs include Bus Lines, Tolls & Bridge Fees, Newsstands, Laundries, Dry Cleaners, Quick Copy & Reproduction Service and Car Washes. Transaction qualification criteria have not been modified and requirements to meet the category are the same as today (current eligible MCCs include Local Commuter Transport, Taxicabs & Limousines, Restaurants, Fast Food, Auto Parking Lots & Garages, Motion Picture Theaters and Video Tape Rental Stores.

Visa is introducing a new Visa No Signature Required program, which eliminates the signature requirement on qualified transactions under $25 to seventeen merchant categories. The program applies to face-to-face, swiped transactions and intends to provide protections from “No Signature” chargebacks on consumer and commercial cards. No specific Interchange rate category is associated with the program and registration is not required. Eligible MCCs include all 14 small ticket MCCs listed above plus Misc Food Stores, Service Stations and Drug Stores & Pharmacies.

Visa has announced modifications to the Commercial Card Interchange structure. Those changes include an increase to Business and Purchasing Level II Interchange rate; additional eligible MCCs for Visa's Purchasing Large Ticket Interchange rate and changes to Level II and Level III qualification requirements.

Visa is separating the Commercial Product Level II rate into two categories. Business Card and Purchasing Card will increase while Corporate Card will remain the same. Large Ticket Interchange program will now include all non-travel services MCCs. The Interchange rate and registration requirements remain the same.

Visa tax exempt transactions will no longer be able to qualify for Level II Interchange. There is a concern that Level 2 merchants may not have been trained properly to enter tax amount.  A qualifying Level 2 transaction should pass AVS, invoice/order number, customer code and tax amount.  Previously a transaction would qualify as Level 2 if $0 was entered for the tax amount; however, “tax exempt” transactions will no longer qualify for Level 2.  Transactions containing a $0 tax amount will qualify as Visa Commercial Electronic, which is a downgrade resulting in a surcharge. Please make sure enter a correct tax amount (between 0.1% and 22% of the base amount) in order to qualify for the best rate. 

Level III qualification requirements will also be modified. Visa will expand the minimum Level III requirements to include additional data for Level III. Currently all of our Level 3 merchants use 3DSI to process their credit cards.  3DSI is aware of Visa's requirements for Level 3 transactions and is currently reviewing the documentation to determine if any action or modification needs to be made to the 3DSI products. If any action or modification will be necessary, 3DSI will make sure to expedite this to accommodate the April due date.

MasterCard MasterCard has announced changes effective April, 2006. Rate changes to MasterCard Consumer Credit & World MasterCard including Merit III, Supermarket, Warehouse and Standard plus changes to Small Ticket Debit Interchange. New MCCs that can qualify for Small Ticket Debit Interchange include Bus Lines, Tolls, Bridge and Road fees, News Dealers and Newsstands, Laundry Services, Dry Cleaners, Quick Copy and Care Washes. MasterCard will increase rates on MasterCard Face-to-Face and Corporate Data Rate II.

MasterCard has also announced the addition of the MasterCard Cross-Border Assessment Fee to be billed on any transaction in which the country code of the merchant differs from the country code of the cardholder. An example of Cross-Border would be a U.S. merchant who is processing a foreign card. The assessment fee will change depending on using local currency or currency other than that of the merchants location. US merchants settling in US currency will incur a 10 basis point assessment from MasterCard when accepting a foreign card/currency.

We will keep you posted with additional information as it becomes available.

This is part of Visa's effort to eliminate the need for Issuers to re-issue a new card number whenever a cardholder is approved for a new card product. Visa will implement processing that will allow Issuers the flexibility to define product attributes at the card level, for each transaction. This enhancement also prevents the need for cardholders and merchants to make changes to a recurring payment account number when the cardholder is approved for a new card product, and is currently limited to U.S. Consumer Credit programs, and applies to Visa Traditional and Visa Traditional Rewards products.

To support this enhancement, Visa has redefined the last position of the Authorization Code using the following values:

A= Visa Traditional B= Visa Traditional Rewards C= Visa Signature D= Visa Infinite

Client Impact

Clients should be aware of these new processing rules involving the identification of the card product for Interchange qualification purposes as this will potentially increase the costs to merchants to process credit card transactions. It may be difficult to predict the impact of these changes on your business, because the price you will pay depends in large part on the types of cards your customers use when they pay you.

The Bottom Line

If you currently have a tiered rate structure with a qualified, mid-qualified and non-qualified bucket pricing, then you will find that many of the transactions that once were consider qualified will move to the mid or non qualified rate bucket. Traditionally, most merchants only paid attention to the qualified rate, so providers have build huge margins into their mid and non-qualified pricing. Merchants today must pay even closer attention to MC and Visa downgrades when analyzing statements for savings. Contact us to speak with one of our payment consultants who can help you evaluate the impact this latest round of card association Interchange changes.

Additional savings analysis should be considered if on your current rate structure you pay the same rate for both MasterCard and Visa. MasterCard will increase the base rate for retail swipe card transactions by 0.09%. Visa’s base retail rate will remain unchanged. If you currently pay the same rate for both MasterCard and Visa transactions, you will want to consider changing to a custom price structure.