Archive for the ‘Retail Credit Card Processing’ Category

Largest card processing antitrust settlement

Saturday, July 14th, 2012

Visa Inc, MasterCard Inc & several US acquiring banks have agreed to settle an interchange fee and merchant discount antitrust litigation. The suggested settlement, still pending a judge approval, is setting a new industry record – amounting to $7.25 billion!

The Credit Card Processing Blog has repeatedly posted regarding the lack of transparency currently existing in the credit card processing industry. Taking a look at our latest posts: Rolling Reserve – the fine print, A new way to shop for a merchant account and Credit Card Processing – The right to know are three good examples.

One of the plaintiffs’ allegations was that Visa, MC & the acquiring banks are collaborating to directly and indirectly disable merchants from mitigating credit card costs. In order to mitigate costs one first need to be familiar with all relevant facts and understand the data gathered. Lack of transparency as well as artificial complexity does not enable merchants to effectively negotiate fees.

On top of the suggested settlement amount, the associations will now allow merchants, for the first time, to add a surcharge when accepting cards. Though such will not apply in: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma & Texas, were such practice violates existing state discrimination laws, it is a huge shift from Visa’s and MC’s rules – prohibiting retailers from charging an additional fee when processing a credit card transaction.

Hopefully this historic suggested settlement would direct the associations towards transparency and simplicity for the benefit of all.

Gidi Argov, Founder and CEO

Charging surcharges on credit card transactions

Monday, September 27th, 2010

Name it any way you want: surcharge, convenience fee, credit card acceptance fee or checkout fee – Visa and MasterCard do not allow retailers to charge an additional fee on top of a credit card transaction.

Charging surcharges on credit card transactions

MasterCard states that “A Merchant must not directly or indirectly require any Cardholder to pay a surcharge … in connection with a Transaction” (Page 114, 5.11.2 Charges to Cardholders, to date – document is constantly updated and therefore pages and paragraph numbers keep changing). If this is not clear enough: MasterCard rules specifically prohibit merchants from adding a fee for acceptance of MasterCard cards. This is considered surcharging.

Visa are saying the very same thing: “Visa rules do not allow retailers to charge cardholders a checkout fee for using their cards” and going a further step advising card holders to report retailers that are charging checkout fees.

Both Visa and MasterCard base their rules on discrimination laws, as surcharging a shopper paying with a credit card is, in a way, a shopper discrimination based on type of payment. Several US states have accepted the associations’ ruling and outlawed surcharges on credit card payments. These states are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma & Texas.

So what does this mean? Do the associations and state regulators expect retailers to finance processing fees out of their own pockets? No. Retailers should have their processing fees embedded within their final prices and therefore are allowed to offer discounts for cash and check purchases, as well as for PIN debit cards, as long as such offers are made to all buyers.

Gidi Argov, Founder and CEO