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This spring, U.S. Representatives Peter Welch (D-VT) and Bill Shuster (R-PA), introduced HR 2382, the Credit Card Interchange Fees Act of 2009.  Welch, the bill’s author, states that “credit card fees are killing small businesses.”  The act, targeted to help small retailers, would limit the fees charged to merchants.  It would also prohibit charging higher fees to merchants when customers use reward cards and would give the Federal Trade Commission the right to review interchange fees. Continue reading "Interchange Fee Legislation – Who Will Pay The Price?"

If we have learned anything over the last year, it is that no industry is immune from the financial crisis.  Your first line of defense against the economy is your job. The second is your credit cards. Credit cards have forced a whole new financial difficulty on our country. In a previous post, I spoke about the new rules that will be taking effect in 2010 regarding interest rate increases. But what is going to happen in the meantime?

Many large credit card companies, such as Capital One, are disclosing a rise in delinquencies for November of 2008. Issuers, like American Express and Bank of America, are raising rates on existing balances and slashing credit lines in the short term. Banks are expected to cancel $2 trillion in available credit over the next year. If credit card issuance is being cut and rates will soon be regulated, it only seems inevitable that banks will turn to raising Interchange rates on merchants to cushion the fall.

Continue reading "Will Lack of Credit Options Lead to Rising Interchange Rates?"

In previous posts I have written about HR 5546 which will allow merchants to negotiate their Interchange Rates directly with Visa and MasterCard. As I have been following the developments, it seems as if the National Retail Federation is making the card processing companies out to be deceitful. In many articles the NRF has referred to Interchange fees as “hidden costs,” and also as being the cause of consumers paying more for goods. Interchange is public record.

HR 5546 is also known as the Credit Card Fair Fee Act of 2008. This bill would require Visa and MasterCard to negotiate with merchants and reach an agreement on credit card terms and conditions. If an agreement is not reached, both sides will be required to submit their final offers to binding arbitration by a three-judge panel appointed by the Department of Justice and Federal Trade Commission.

Before a bill is passed it has to go through several phases:

Continue reading "Will Merchants Be Able To Negotiate Interchange?"

I have discussed in previous posts new Interchange category rate changes that most business owners have most likely seen notifications about on their statements. Most of these notices say “Increase” and these increases are being passed on the merchant. Not all Interchange categories have experienced increases – the main changes have been in the Business, Corporate, and Purchase Card categories and the increases range from .05% to as high as .25%.

Some of the main increases have been Corporate Card Non -Travel Level 2 with an increase of .05%, Purchasing Card Retail with an increase of .10%, and Business Standard T&E with an increase of .25%. Card types such as Corporate Card Retail had a decrease of .10%.  Although the CPS Automated Fuel Dispenser Credit category went down significantly on their rate by .35%, they raised their transaction fee by .20 cents.

Many merchants that take the card types in the increased categories may want to contact their merchant services provider to see what their total increase will actually cost them.

Continue reading "Are Businesses In Store for More Interchange Increases?"

Most merchants have likely seen a disclaimer on their monthly credit card processing statements about an upcoming increase in Interchange rates. The card associations (Visa and MasterCard) have announced some significant changes.  As you are probably aware there are hundreds of different Interchange categories. During April and October, rates in some categories are increased or decreased, and new categories are created. These Interchange rates are not to be confused with reimbursement fees. I mention this because there are two different rate charts. Reimbursement fees are charged to financial institutions to transfer funds between issuing banks. Yes, the banks pay percentages as well.

Several new categories will take effect October 3^rd, 2008. Debt Repayment, Government to Government, and Tax Payment are some of Visa’s new categories.

Continue reading "Will New Interchange Rates Affect Your Business?"

There are many third party processors out there that benefit when the Bank Card Associations (Visa and MasterCard) raise their rates. They look at this as an opportunity to make an additional profit from their merchants. Merchant services providers get to decide how they will pass the various increases and decreases through to the merchant. More often it is the increases that get passed on, and not the decreases. New Visa Interchange rates, MasterCard Interchange rates, and other processor Interchange rate schedules are typically published by the Bank Card Associations in April and October.

Since there are many different processing categories for Interchange rates, they can be confusing to most merchants. Merchants pay higher or lower rates depending on, but not limited to, whether or not it was a rewards card, purchase card, or debit card. Rates can also be assessed based on your SIC code and how often you batch your terminal.

Continue reading "How Rising Interchange Rates Can Affect Your Business"