Visa to Launch New Acquirer Fee in April 2012

In April 2012, Visa will launch a new fee called the Fixed Acquirer Network Fee (FANF). The FANF will be charged monthly and could range from $2 to $65 per location, depending on the number of locations a merchant has.

For more information, read the article below. When finished, we would love to hear your thoughts -- please leave a comment below or send us an email and we can find time for a private conversation.
  
The following article, Visa to Launch New Acquirer Fee in April That Could Run up To Big Numbers,was originally posted on 2/23/2012 on DigitalTransactions.net. View the original article here.

The bank card networks will introduce new fees for merchant acquirers in April, according to information obtained by Digital Transactions News. The most significant fee is Visa Inc.’s new Fixed Acquirer Network Fee (FANF), a key component of a revamped pricing strategy the No. 1 payment card network announced last summer to defend its debit business in the face of new federal regulations that could move volume off of its networks and onto competing networks. MasterCard Inc., meanwhile, is adding two new network fees and is expected to introduce a new debit interchange rate in the controversial small-ticket sector.

The networks in recent weeks began divulging details about new pricing in bulletins to merchant-acquiring banks, which in turn are informing their independent sales organizations and other merchant processors. In contrast to interchange, which is collected by acquirers and paid to card issuers, Visa’s FANF and Acquirer Processing Fee (APF) are fees that Visa charges acquirers and books as its own revenue. Acquirers typically pass such fees and interchange on to their merchant clients.

EMV Chip Cards

Credit card with embedded chip technology.

 

As a trusted and experienced company in the electronic payments industry, we’re relied upon to provide service and educate our merchants with the latest payment technology and information. If you follow the news or perhaps read our blog about the Durbin Amendment, you’ll know that this last-minute addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has sparked fierce debate.  It just went into effect this past October, and already we’re seeing its ramifications. Amidst all the hype, is a little-noticed component about the potential impact the ruling may have on encouraging the migration of debit cards away from magnetic stripe to EMV-enabled or Chip & PIN (Personal Identification Number), technology. The Durbin Amendment is just one of the many reasons why the days of the credit card’s magnetic stripe appear numbered, with chip cards poised to immigrate onto America’s payments landscape.

The EMV specification, originally named for developers Europay, MasterCard and Visa, is a global standard for interoperable credit and debit payment cards, point-of-sale (POS) payment terminals and transaction processing networks based on chip card technology. 

Chip cards, also known as smart cards, use an embedded microchip to encrypt your information, making it difficult for unauthorized users to copy or access your data. Data can only be accessed when your card is inserted into a chip-enabled terminal and you enter your unique PIN. The microchip allows for more accurate verification of a card’s authenticity and a cardholder’s identity. You have a PIN that identifies you as the rightful owner of your card and replaces your signature as the means of authorizing a card transaction.

Update: IRS Withholding Postponed to 2013

In accordance with Internal Revenue Service (IRS) Internal Revenue Code (IRC) Section 6050W, merchant acquiring entities are required to file an information return (form 1099-K) for each merchant reflecting all of their settled payment card transactions.

If a merchant's Federal TIN and legal business name on record with their acquirer does not match IRS records, the merchant could be subject to IRS withholding (the current rate for such withholding is 28% of processing funds). This is why merchants may have received a notice from their acquirer requesting confirmation of their information.

Initially, withholding was going to go into effect on January 1, 2012. However, in November 2011, the IRS announced that the effective date of backup withholding would be postponed until January 1, 2013.

Although withholding has been delayed, it remains imperative that merchants' information match the IRS records.
For more information regarding 6050W, view our original post.

Online Debit & Offline Debit: What's the difference?

Almost every merchant we speak with asks the same question: what is the difference between online debit and offline debit?

The difference between these two debit choices is whether a PIN (personal identification number) is used at the point of sale. When a PIN is used, the transaction becomes “online” and funds are immediately withdrawn from the cardholder’s available funds. When an offline debit transaction occurs, the cardholder signs a receipt, much like a credit card transaction. Funds are not withdrawn immediately.

Update: P2P Payments

For a quick lesson on P2P Payments, view our post from February 2010: Person-To-Person (P2P) Payment Services...What Is It?

The following article, BofA, Chase And Wells Fargo Unveil New P2P Payments Network,by Matt Gunn, was originally posted on 5/25/2011 on BankTech.com. Click here to be re-directed the original article.

Three of the nation's big four banks have developed a person-to-person payment service that'll allow customers to send money via mobile number or email address.

The project, dubbed clearXchange, is a joint venture between Charlotte, N.C.-based Bank of America, San Francisco-based Wells Fargo and New York-Based JPMorgan Chase. It enables the three banks' customers to make payments from their checking account to anyone with an account at one of those three banks. Chase, Wells Fargo and BofA said clearXchange will roll out nationally, and that the plan is to ultimately bring other financial institutions into the network.

It is the first bank-owned solution of its kind.

"This is an innovative game-changer in electronic payments," said Mike Kennedy, EVP and Head of Payments Strategy at Wells Fargo. "We want our customers to be able to easily send money to anyone without having to establish a new account outside their primary bank. All our customers need to know is the email address or mobile number of a friend or family member and we will take care of the rest utilizing clearXchange."

TheHill.com: Durbin, bankers battle over interchange fees

This article, by Vicki Needham, was originally posted on 4/28/2011 on TheHill.com. Click here to be re-directed to the original article.

The battle between the banking industry and Sen. Dick Durbin (D-Ill.) continued on Thursday as the Senate leader defended his proposal to lower swipe fees charged by banks.


Durbin responded on Thursday to a letter from the American Bankers Association (ABA) reiterating their opposition to any to changes to the interchange system, saying that lower fees will reduce retailer and customer costs.

The Federal Reserve has proposed capping the fees at 12 cents a transaction, replacing a formula that averages 1.14 percent of the purchase price, or about 44 cents, that accounts for $16.2 billion in revenue.

Overview of Data Storage Requirements

• Magnetic Stripe Data: Do not store magnetic stripe data after receiving authorization. After a transaction is authorized, the full contents of the track data, which is read from the magnetic stripe, must not be retained on any system. The account number, expiration date and name are the only elements of the track data that may be retained if held in a PCI compliant manner.
• No CVC and CVV2 Storage: The three-digit code on the back of the card is known as the CVC or CVV2 number. When asking a cardholder for CVC or CVV2 data, you must not retain this information on any kind of paper order form or store it in any database. Do not store these numbers anywhere!
• Know Your Liability: You (the merchant) are liable for losses resulting from compromised card data.
• Know Your Employees and Monitor Their Activities: Ensure your employees are adequately trained in all facets of data security. You are liable for the activity of your employees.