Studies show that it costs five times more to acquire a new customer than to retain an existing one.  Loyal customers are more profitable, spending more and costing less to serve.   Loyal customers also provide authentic word-of-mouth referrals and serve as trustworthy advocates of a company’s brand.  No wonder consumer-driven businesses have embraced loyalty programs.  From travel and entertainment to gas and groceries, businesses have enrolled the average household in over 14 loyalty programs.  Customers enroll and participate because in addition to getting what they want, they are recognized for their value and contributions to the company.

But what if you provide business-to-business (B2B) goods or services - is establishing and maintaining loyalty with your customers any less important?   Facing similar challenges, finding it more difficult to get and keep customers in the current business climate, businesses in manufacturing, wholesale, distribution and services can benefit by implementing a loyalty strategy. 

Your customers have greater access to information, competitive choices and to each other through social networking.  Against this backdrop, businesses understand that they must continuously innovate if they want to survive.  Differentiating your offering through a B2B loyalty program can create excitement and enhance your customer relationships. 

Current and prospective customers are your most valuable financial assets.  Rather than maximizing the value from every product you sell, think about creating the most value from each customer.  When designing your loyalty program, consider the business outcomes to be achieved, the specific customer behaviors you wish to influence and the incentives required to motivate those changes.   One of the most important goals of any loyalty program is to keep the lines of communication open with ongoing and relevant dialogue.   Finally, a successful loyalty program requires that you maintain a long-term outlook and commitment to the program.  Have a coherent value proposition and dedicate resources and funding.  Don't start a loyalty program without making it part of your overall business strategy. 

Decide what you want to reward first.  Is it repeat business and referrals?  Then answer the question how rich of an award you can afford?  The most popular point metric is dollars spent (for example 5 points per $1).  Others examples include double points for buying certain items or quantities or awarding points based on paying invoices on time, etc.  However, don't make your program overly complex.  Customers want simplicity.  Be transparent.  Be clear.  Keep it simple. 

Designing strategies that strengthen loyalty is the first step but lengthy development times are a significant obstacle to launching a loyalty program.  However partnering with others can reduce time to market and costs.  You don't have to develop all the enabling technologies to facilitate a loyalty program on your own.   Using existing shopping, redemption, fulfillment and email communication systems along with awarding points that already have value with a significant base of reward partners, will help you focus on simply customizing your point accrual and redemption rules as well as your promotional and marketing materials.

Integrating with business partners in a loyalty program provides other benefits too by:

• Extending the opportunities for your customers to earn points
• Expanding the redemption choices
• Exposing your solutions to a community of business loyalty program members

Incorporating social responsibility into your loyalty program is a wonderful way to support both your customers and a good cause.  For example, VantagePointsRewards, a new B2B loyalty point currency, provides all the tools needed to manage and deliver rewards in partnership with other business-to-business enterprises at very low costs with a charitable fundraising goal of supporting the important work of the food bank.

In conclusion, B2B organizations should not overlook the value a client loyalty program can deliver by building stronger business relationships.

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Should you consider a B2B Client Loyalty strategy?

The shift from paper base to digital currency has been quietly transformative.   A panel of financial experts discuss digital currency, trends, innovation and regulatory policies to consider and avoid.  

To start, digital money trends show favorable growth.  Between 2003 and 2008, card-based transactions grew by 13% worldwide.  And government use is part of this growth.  For example, the U.S. federal government is using purchasing cards for procurement to save $1.7 billion a year according to a GAO study.  Beyond cards, consumers have embraced new technologies that facilitate convenient and secure electronic payments across a wide range of platforms.

While banks are regulated, what about a host of non-bank participants who provide alternative payment services from ecommerce, person-to-person, micro transactions or prepaid?  Should they be regulated to address consumer protections, data security, money laundering, anti-terrorism and other illegal activity and if so, how?

Finding the right regulatory structures necessary to support continued payment innovation is important.  As an example of what to do - emulate Check 21.  Check 21 law was established in 2003 and went from zero to nearly 100% adoption in five years.  This success is pointed to as a regulatory model to follow where the legal framework is established but no specific solution is mandated; where baseline consumer protection is set but not the process of exchange, letting the market freely adjust to changes in technology and innovation.  The government’s role is to protect fair competition but must resist the urge to intervene with price controls.   In Australia where regulators artificially suppressed Interchange pricing, consumers didn’t get lower cost or added benefits from retailers and incurred lower rewards and more fees when making certain payment choices. 

All payment systems are measured by four factors: security, integrity, efficiency and reliability.  With the growth in the variety of payment mechanisms, consumers making payment choices adjust market share to those payment systems who best meet this criteria.  This free market approach is better than having politicians pick winners and losers.  Regulations should provide the framework to impose security and protect integrity through standards but not set pricing or otherwise inhibit innovation.

Watch this C-Span video presentation of the American Enterprise Institute Discussion on Digital Money

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Digital currency: trends, innovation and regulation

With tax day almost here, it seems appropriate to consider what the federal tax system is costing taxpayers in addition to the taxes themselves. 

• Complying with the federal income tax code amounts to imposing a 22.2-cent tax-compliance surcharge for every dollar the income tax system collects.
• Corporations with assets of $1 million or less (more than 90 percent of all corporations) paid a minimum of $382 in compliance costs for every $100 they paid in income taxes. 
• A compliance burden of 6 billion hours per year represents a work force of over 2,884,000 people: Larger than the populations of Dallas (1,210,393), Detroit (900,198) and Washington, D.C. (553,523) combined; and more people than work in the auto, computer manufacturing, airline manufacturing and steel industries combined.

To be competitive in the next century and to renew the American dream, we must change the way we fund our federal government by implementing a smarter tax collection system.  Regardless of whether you believe taxes are too high or low, it’s clear that our current income tax system is antiquated, corrupt, expensive and wasteful. 

A recent USA TODAY article titled "Tax code grows like kudzu as another April 15 approaches" points out that "The instruction booklet that comes with Apple's new iPad is one page. The instruction booklet that comes with this year's IRS 1040 long form is 172 pages."  The tax code has grown so complex that even the IRS commissioner doesn't prepare his own taxes.

Why is the tax code so complex?  Career politicians are to blame, Rs and Ds alike, as they manipulate the tax code, providing tax preferences as their main instrument of power and influence and rewarding special interests to get re-elected again and again.   Spending our tax dollars on earmarks are another way in which members of congress reward their campaign donors.  And as the government sector grows, lobbyists are enjoying record revenues according to a recent report.  Tax reform is not only about providing badly needed economic stimulus (both long and short term), but also about reforming the system of earmarks and tax preferences in exchange for campaign cash, facilitated by a growing army of lobbyists/influence peddlers. 

A new and improved approach is needed to replace the tangled web of nearly 10,000 exemptions, deductions, credits and other preferences that currently clutter the U.S. tax code in order to create a simpler and fairer system that American workers and businesses can more easily navigate.  By eliminating many of the tax expenditures that benefit narrow special interests, tax reform offers fiscally responsible tax-relief to the middle class and growth opportunities for American businesses to create jobs and compete globally.

I’m an entrepreneur for tax reform.  And I’ve become an advocate for the FairTax plan after reading the books, studying the research, carefully listening to the arguments for and against both the status quo and other proposals.  The FairTax plan follows these eight guiding principles:

• Fair: It must protect the poor and treat everyone else the same. No exemptions - no exclusions - no advantages.

• Simple: It must be easy to understand for all Americans - no matter one's education, occupation, or station in life.

• Voluntary: It must not be coercive or intrusive.

• Transparent: We should all know what the government costs. There must be no "hidden" taxes.

• Border Neutral: Our exports must be unburdened by any tax component in the price system, while imports carry the same tax burden at retail as our domestic competition.  Corporate income taxes, payroll taxes and their associated tax compliance cost and avoidance fees are embedded in the prices of every domestically produced good and service we buy and export.   Why should our citizens and exports be burdened by higher prices simply due to our tax system?  

• Industry Neutral: It must be neutral between businesses and industries.

• Strengthens Social Security:  Broadening the tax base with a national retail sales tax means that millions and millions of foreign visitors (both legal and illegal), who currently don’t pay income or payroll taxes, will contribute by paying taxes on their spending.

• Manageable Transition Costs: It must not be costly or difficult to implement.

Lets move away from the “tax the rich” answer to all our problems.  That worn out solution only goes so far.  AP recently reported that "Nearly half of US households escape fed income tax".   We are quickly moving in an unsustainable direction with "a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education." 

There is a more intelligent way to fund our government.   There are only two things for "rich people" to do with their money – one is to spend it and the other is to save it.  If we tax on spending, when they spend it - they pay tax.  If they save it, there is more money and capital to loan to entrepreneurs to build innovative companies and bring innovative products to market, fueling jobs that pay higher wages, leading to more spending and to higher tax revenue. 

And it’s a better plan for the poor than having to “file” to get a tax credit.  The poor can benefit greatly under the FairTax plan:

1) by increasing purchasing power through more take home pay (they get 100% of their earnings with no payroll deductions and a prebate payment at the beginning of every month to pay for the taxes on purchases up to the poverty line) and buying cheaper goods that don’t carry embedded tax and tax compliance costs.

2) from a rapidly growing economy due to more US jobs (since our products will be more competitive on the world market) and with greater investment in new US based businesses developing innovative technology breakthroughs that can deliver cheaper, cleaner energy, medical advances, healthier food, etc. that raise all citizens standard of living. 

Given the increasing global competition from China, India, and the rest of world, we must innovate to stay ahead and this innovation must start with replacing our corrupt tax code. 

I hope you will join our business in becoming involved in your own way.  An easy first step is to become listed in the FairTax business directory at http://fairtax.us.  Then join the grassroots effort to elect candidates that will pass the FairTax legislation already in the house and senate. 

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Smarter Taxes

Another big benefit of having your pay direct deposited onto a Visa payroll debit card is that you can use the same routing and account number to also file your tax return electronically and get your refund directly deposited to your pay card in weeks instead of months!

According the IRS.gov, you can get your refund faster by telling the IRS to direct deposit your federal income tax refund on up to three different accounts.  If you want the IRS to deposit your refund into just one account, use the direct deposit line on your tax form.  However you also have a choice to direct deposit your refund to more than one account.  With split refunds (use IRS’ Form 8888), you have a convenient option for managing your money.  For example, if you use two paycards within your family, you can instruct the IRS to divide and share the refund at your request.  

Give your tax preparer your Visa debit paycard's account and routing number, and your refund will be deposited to your card directly. No more waiting for your paper refund check to arrive in the mail. Electronic refunds usually arrive in 7-10 days after filing.   With this method you can guarantee the delivery of your tax refund and get your refund dollars faster.   Sending your refund to paycard account for immediate use can save you the expense of taking a loan against your refund.   Tax refund loans fulfill customers' demand to get refund dollars quickly, however, the cost of these loans eat up much of the refund.  Just like the savings from avoiding check cashing service fees on pay day, speeding your tax refund using your paycard will reduce the need for expensive tax refund loans. 

Whether you file electronically or on paper, direct deposit gives you access to your refund at least one week faster than a paper check.  Direct deposit also avoids the possibility that your check could be lost or stolen or returned to IRS as undeliverable.  The IRS processes around 120 million individual income tax refunds. Of those, millions of refunds are unable to be delivered due to address changes and incorrect account information.  Some refunds took up to three months to be received.   Don't let this happen to you!  

Enjoy savings, safety and faster tax refunds using your Visa debit payroll card for direct deposit.  Ask your employer for a paycard today or order now.

Ps. Want to get a tax return deposited to your paycard at the beginning of every month?  Learn how.

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Visa Payroll Debit Cards Speed Tax Refunds

Financial institutions use technology and credit scoring strategies to manage lending activity. Now businesses lending to their customers by extending trade credit are learning the value of adopting credit monitoring solutions as an integral part of account receivable best practices.

The credit health of customers is top of mind for many CFOs today. Slow pays, delinquencies and credit losses have a major impact on companies of all sizes but are particularly harmful to small businesses that, in the past, have not had affordable credit scoring and monitoring solutions available.

As businesses emerge from the recession and sales pick up, the best practice is to determine those buyers with a higher probability of payment before extending credit. Like banks, businesses need processes in place to evaluate and assess the credit risk of their customers, and to extend more credit on better terms to support higher sales to those with the least risk and to limit trade credit or use alternative payment strategies for more risky customers.

Scoring solutions help business adapt to a changing economy. A lot can happen, even in a few short months. In these uncertain economic times, some customers will improve while others may decline.  Using software-as-a-service, web-based, AR Best Practice credit scoring technology to segment poor from better credit buyers can produce a competitive advantage.

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Credit Scoring, not just for banks

We are often asked to suggest processing solutions for mobile merchants. Recently more and more of those conversations are focused on payment applications for the iPhone. Much of the buzz can be attributed to VeriFone’s recently launched PAYware Mobile iPhone application; the first payment app with a card reader available for the iPhone clearly distinguishes it from all others.

In our experience, we have found accepting card payments on a smart phone to work best in a sales environment where a single user will operate the device, one customer at a time. And the PAYware Mobile solution has received positive client feedback from our early adopters. The thing about early adopters is that they want the latest technology regardless. But for others, they want to analyze their options.

Before there were smart phones and apps, there was a payment service known as Touch Tone Capture (TTC). For many mobile merchants Touch Tone Capture remains a viable option. So let’s compare, touch tone vs. the iPhone.

Touch Tone Capture (also known as Dial Pay) offers a simple card processing solution for mobile merchants. Using any touch tone telephone, you speed-dial an 800 number that connects you to an interactive voice response system where you use your telephone’s keypad to enter the card number, expiration date and the dollar amount to request an authorization code. TTC service is a full featured system and supports AVS, return, force, authorization only, and void functions. Merchants use a manual imprinter to make an imprint of the cardholder's card and obtain the cardholder’s signature.

With the PAYware Mobile app for the iPhone, merchants swipe their customer’s card through a secure card reader and enter the dollar amount. Upon approval, the customer will sign the iPhone screen and can opt for a copy of the receipt to be emailed to them.

VeriFone's encrypted card reader plugs into the iPhone dock connector and cradles the phone. PAYware Mobile uses VeriShield Protect to encrypt card data during the card swipe process, so no sensitive data ever reaches the iPhone payment app. This eliminates hand keying card numbers, speeds transaction times and reduces errors. The signature capture feature securely archives customer receipts should they need to be retrieved in a dispute for greater chargeback protection. In addition, merchants can qualify for lower swiped card Interchange rates.

Break-Even Fee Analysis

Entering the 800 TTC phone number into your speed dial is free.  By comparison, PAYware Mobile has a $49 set up fee.

With PAYware Mobile you will need to purchase a card reader.  Currently this will run you about $119 plus shipping.  A new manual imprinter, merchant plate and 200 sales drafts cost about $35, but you will need more slips over time.

PAYware Mobile costs $15/mo. and $0.17 per transaction, but with the card reader you are able to qualify for swiped card Interchange. TTC costs $0/mo. and $0.30 per transaction, yet your transactions will qualify at the higher key entered Interchange. For our example, we are going to round the Interchange difference between swiped and keyed transactions to 40 basis points.

Here are three calculations base on different average tickets.

This sample analysis assumes all transactions are swiped. The analysis will change if you will use your iPhone to process phone orders, invoices or accept unreadable card transactions where the mag-stripe is damaged.

As you can see, merchants should examine their monthly sales volume when deciding to implement a swiped card solution and analyze the impact from lower Interchange rates. If you are a seasonal merchant, fluctuating between months of peak sales then months of no sales, the no monthly fee of TTC can be appealing. However, consider the benefits of faster transaction times during your peak times, especially if you might lose sales if you are unable to get a line of customers processed.

Protecting against disputes and chargebacks

Merchants should understand that card transactions are a convenient form of payment, not a guaranteed form of payment. Three things are required to help protect merchants from card holder disputes and card issuer chargebacks.

• Proof that the card was present. This can be accomplished by swiping the card and transmitting the swiped card data with the sale. Another way to prove the card was physically present is by making a manual imprint of the raised information on the card itself.
• Obtain an electronic approval code.
• Obtain a signature of the cardholder on a sales draft (certain transactions do not require signatures) and if no refunds are allowed, “All Sales Final” must be printed on the receipt near the signature line.

Merchants must retain this documentation and if requested must be able to provide this proof within a limited time frame.

Using TTC and obtaining manual imprints of all credit and debit card sales and safely storing imprinted sales drafts for easy retrieval is obviously not as convenient as the PAYware Mobile app where the signature capture service remotely archives the customer receipt for electronic retrieval anytime it is needed. Note: signing the screen to capture the signature does you no good without the card swipe or getting an imprint of the card. Consider this value as part of your equation when buying a card reader for your iPhone.

Conclusion

When selecting a mobile processing solution, in addition to the cost, merchants should consider their sales volume, chargeback risk, card data security and operational efficiency.

If your sales volume is low, you know your customers and you are not concerned about chargebacks, setting up Touch Tone Capture service is certainly still a good option to avoid monthly gateway fees. The PAYware Mobile iPhone app is recommended for mobile merchants where the savings from qualifying at swiped card Interchange rates offsets the monthly fees. Furthermore, it is easy to justify the cost of VeriFone’s card reader when you consider the speed, security and convenience of swiping cards for greater chargeback protection with signature capture and electronic receipt storage.

Starting this month, Apple Retail Stores in the United States and the Apple Store online will begin selling the PAYware Mobile reader. Other iPhone retailers are likely to follow. However, please use caution. Remember, you will still need a merchant account to make the iPhone payment app and card reader work. Don’t forget to shop around and read the fine print before choosing your payment processing partner. If you don’t, you may find yourself in a three-year contract with expensive early termination fees, non-qualified surcharges and an impressive fee schedule including monthly minimum billing.

Vantage can establish merchant services for your business with a variety of wireless devices and solutions including PAYware Mobile and Touch Tone Capture. See http://vantagecard.com/solutions/wireless for a complete discussion on wireless options. For an instant merchant Interchange rate quote, use the Merchant Rates quote calculator.

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Which is better for Mobile merchants? Touch Tone vs. iPhone

Merchants should be aware of the pending payment industry deadline of July 1, 2010 related to the Payment Application Data Security Standards (PA-DSS).

Effective July 1, 2010, acquirers must ensure that merchants only use PA-DSS compliant applications.

What does this mean to merchants?  If you are using old payment devices or software, you may need to upgrade.  Merchants using point of sale register systems should inquire with their point of sale vendor about their compliance status if they have not already done so. Merchants should also review the information posted on the PCI Security Standards Council website at https://www.pcisecuritystandards.org/security_standards/vpa/ or on the Visa website at http://usa.visa.com/merchants/risk_management/cisp.html?ep=v_sym_cisp.

PA-DSS is part of the overall Payment Card Industry Data Security Standard (PCI DSS) to protect account data in payment transactions. Unfortunately, there are no single-step solutions for PCI DSS compliance as security standards continually evolve based on industry feedback, real world security incidences and new emerging payment technologies like unattended payment terminals and EMV chips.

The last revision of the data security standard was in October 2008.  According to Bruce Rutherford, chairman of the PCI Security Standards Council, a new iteration of the DSS is coming this year.

• Late April: New PIN transaction security (PTS) standard released (formerly PIN Entry Device (PED) Standard).
• October 2010: Next iteration of both PCI DSS and PA DSS released to public.

While many merchants are not deemed high risk, all merchants should follow best practices to comply with securing cardholder data. Remember; if you don’t need it, don’t store it.

Please visit http://www.vantagecard.com/resources/PCI_Data_Security.html for additional information on PCI and compliance.

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Payment security compliance deadlines and revisions announced

MerchantRates.com, where ALL merchants large and small can get an Interchange rate price structure to lower their costs, has been redesigned with a new look for 2010.

MerchantRates.com has also added new content. In addition to providing an instant, detailed merchant interchange rate quote calculator and guide, MerchantRates.com has created a Frequently Asked Questions resource, covering topics including:

• Merchant Interchange Q&A
• Merchant Rates Quote Q&A
• Payment Technology Q&A
• General Merchant Account Q&A
• Card Payment Rules Q&A

Vantage Points Rewards, a client loyalty rewards and corporate giving program where a portion of the value of each award is donated to the Food Bank, has also been redesigned.

If you are not earning rewards processing your card payments with your current merchant services provider, we invite you to consider our Vantage Points Rewards program. Vantage clients earn one point for every transaction they process or one point per $50 in sales, whichever is greater. Use your points to shop at nearly 200 name brand reward partners already in the program. Please visit http://VantagePointsRewards.com for more information on this unique and exciting offer or to join us as either a Reward partner or Business partner.

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New Merchant Services to lower costs and earn rewards

Paper checks don’t remain as paper very long. In today’s digital age, they are quickly imaged so they can be electronically cleared and settled.

Converting paper to digital images became law in 2003 with the passage of the Check Clearing for the 21^st Century Act (Check21) and the initial implementation meant large companies and banks didn’t have to ship paper all around the country.

Today, more and more of the paper check imaging is being done by merchants and businesses that accept them. Community banks led the way in deploying remote-deposit check scanners as a way to offset the competitive advantage mega banks had with their branch network. By scanning and electronically depositing check images, community banks were able to attract business customers and businesses could choose a bank not just for the convenience of the physical branch to make paper check deposits.

Some businesses image checks one at a time at the point of sale while others use industrial check scanners that can image hundreds of checks a minute in the back office. Check imaging is now incorporated into ATM deposit functions and there are even apps available using your smart phone’s camera to snap a photo and deposit a check.

We’ve come a long way in seven years. But a big question remains. Why do we even have to write a “paper” check in the first place, why not just start with the image?

Is the industry ready for next evolution in check technology?

The inventor of the paperless check, Global Standard Financial, Inc, (GSF) thinks so. Clark Gilder, CEO of GSF points to a Fed policy paper published in November 2009 titled Digital Checks as Electronic Payment Orders (EPO) that agrees with him.

The Fed writes that “a digital check EPO could leverage the existing electronic check infrastructure and provide a convenient, low-cost payment option for both consumers and businesses, based on a payment method that they have found useful for many years.”

GSF announced that they had been awarded two US patents covering the fundamental processes necessary to securely create a paperless check (GSF describes these pure electronic payments as Digitally Originated Checks™ or "DOCs") ahead of the big banking show (http://www.bai.org/) this week.  To see the GSF patent, go to http://bit.ly/DOC_Patent.

As an alternative payment, keeping all the benefits of writing a check yet eliminating the need to start with a piece of paper has enormous implications for business models from peer-to-peer payments and gift giving to B2B invoices and payments to government and merchants.  And accepting paperless checks would costs much less than accepting a debit card today, something businesses and merchants should be enthusiastic about. In fact, instead of pushing Interchange legislation, they should push Congress to adopt revisions to the Check 21 law to secure paperless checks legal standing.

Of course, the security demands of both banks and check writers are a key consideration in any new payment method.  While the volume of paper checks is starting to decline, the growth in paper check fraud continues. Forgers can easily alter the dollar amount of a paper check and simple signatures are the standard authentication mechanism. Clearly sophisticated fraud technologies, electronic signatures and encryption can greatly enhance security. GSF employees these as well as providing additional security using digital rights management features and unique per check identification codes. In terms of security, these enhanced measures make paperless check fraud much more complex to perpetrate.

Over the years, the Federal Reserve has gone about the business of eliminating expensive paper processing after the check was written. Now it is the time to extend the benefits of digital checks all the way to the check writer. With the Fed and ECCHO (the check clearing trade association) endorsing the paperless check concept and the know how and technology available, its just a matter of time before we will all be carrying a check book again, except this time it will be digital and on our smart phone.

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From Imaged to Paperless Checks

House Financial Services Committee Chairman Barney Frank announced his committee would not take up Interchange legislation this year.   However there are steps that small businesses, family-owned restaurants, local retailers and service providers can take to help themselves without waiting on the government.

Immediately switch to an Interchange pass-through pricing plan.  For example, effective October 2010, Visa will extend Small Ticket Interchange to most merchants.  This is an effective reduction in the overall Interchange costs for most merchants.  However, few merchants will benefit since there is no difference between a transaction over or under $15 in their current merchant account contract.  In fact this is just one example.  Most merchants are not getting the benefit of all the incentives Interchange rates available including credit voucher Interchange.  Bundled, blended, “rate as low as” pricing structures, where merchants pay non-qualified surcharges, are unable to realize lower costs on transactions that meet the specified criteria for certain Interchange categories.

Conduct a Google search using keywords "merchant Interchange rate quote" or visit http://merchantrates.com to get an instant quote.  Also consider the tips on how to lower your real rate to accept card payments at http://myrealrate.com/lower-my-real-rate.aspx and while you are there benchmark your card acceptance costs with other businesses of your same size and in your same industry.  A little study will go a long way.

As far as Interchange legislation is concerned, I expect it will continue to be big business for lobbyist on both sides of the issue.  I however am concerned about government intervention. I have zero confidence that the politicians can come up with a better solution than the market.  Because there is money to be made, there are lots of innovative companies developing new payment technologies and more secure systems that are attracting venture capital within the payments space.  Now is not the time to overly regulate as this tends to benefit the incumbents and stifle innovation.  I am also skeptical that the small businesses will out negotiate huge national chains or community banks will out negotiate to big to fail banks when the lobbyist and politicians get together in the back room.

In November 2009, the US Government Accountability Office report indicated that new government imposed regulations on payment card Interchange fees would be difficult to implement, with any benefits hard to measure.   Merchants may be better off championing alternative payment solutions than risk the dangers of unintended consequences asking the government to get involved.

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No Interchange reform legislation in 2010