If the proposed settlement in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case is approved, merchants will receive billions of dollars, a temporary Interchange rate reduction and the ability to surcharge card payment transactions. In return, the agreement releases Visa and MasterCard from future legal claims regarding Interchange, network rules, merchant fees and related issues by merchants.

Both the National Grocers Association and the National Association of Convenience Stores say they will oppose the agreement on the basis that the agreement does not address how Interchange is set or the complexity of Interchange fee schedules. Target and Wal-Mart are not plaintiffs in this case, but have criticized the proposed settlement for similar reasons and because it would grant Visa and MasterCard releases from future legal claims, even by merchants who aren’t part of the settling class.

Over the next few months, the judge will make a decision to approve or reject the proposed settlement. The next step is a “fairness hearing” in Brooklyn federal court. Despite some objections, most analysts don't expect enough merchants will opt out of the settlement deal to derail it. One reason is that without a settlement, it will take many more years and cost a lot more money to take the case all the way to trial. Another may be that the largest retailers have secured a collective bargaining provision to negotiate lower Interchange rates directly with the payment networks. It has been reported that 15 of the top 100 retailers representing 80% of Visa and MasterCard credit-card volume have already agreed to a separate settlement with the card networks. And while merchants give up their right to sue the networks and credit-card issuers over similar issues, lobbying efforts at both the federal and state levels are expected to continue for merchant rate Interchange reductions and simplification.

An estimated 7 million retailers will be affected by a proposed settlement in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case.

According to Reuters, it has been announced that Visa and MasterCard along with their card issuing banks have agreed to settle the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case with U.S. retailers for $7.25 billion. If approved by the judge, it would be the largest antitrust settlement in U.S. history.

According to reports, the settlement will include provision to allow stores to surcharge customers extra in an attempt to steer customers toward less expensive payments (although certain states laws prohibit the practice), will pay stores $6 billion and will lower interchange fees by the equivalent of 0.10% (10 basis points or $1 per $1,000 in sales) for 8 months valued at $1.2 billion with an additional $525 million paid to stores suing individually.

Stay tuned for more coverage on this settlement. But be careful. In the 2003 Visa and MasterCard settlement of a lawsuit by stores over the the "honor all cards" rules, $3 billion was paid out and many merchants gave up a third or more of their take to law firm solicitations. Just be patient. The details will come out on what if anything merchants need to do. In regards to the lower Interchange, as we continue to preach, move to a direct Interchange pass through service provider to take advantage of these savings (have we mentioned that's what we do?)

Visa Inc and MasterCard Inc are moving closer to a settlement in a seven-year old case named In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. Most analyst are predicting a settlement and possibly by the end of July. One of the possible settlement outcomes could be a reduction in interchange fees which is expected to have a negative impact on bank stocks. If your holding bank shares of major card issuers, be warned. If you are a small merchant, we will keep you posted here about what it means to you and anything you will need to do.

As you know, Vantage provides the most transparent, direct pass-through of the payment industry’s universally established Interchange, Assessment and Access fee schedules.

This April, a whole new set of card fees are being introduced. Vantage reports on and tracks these industry fee changes as they occur on our web site and this resource is often use by reporters and market analyst as well as merchants, businesses and banks. We also post about the payments industry and card Interchange on our blog. In July 2011 we first alerted merchants to the Visa announcement to charge a new location fee.

Vantage passed through all the Fed regulated debit rates to our clients. We posted a Vantage Study Revealing the Results of Fed Regulated Debit in October. And while Vantage clients took advantage of the savings immediately, most Small Businesses are Missing Out on Debit Interchange Savings.

With these new fees, Visa is responding to government regulations that require all debit cards to have two unaffiliated network choices. Visa is lowering it’s per transaction access fee (Vantage is passing this savings on to our clients) and is instead implementing a fixed acquirer fee. Visa hopes to encourage merchants to route more transactions to Visa (a monthly fee divided by more transactions equals lower overall per transaction pricing), or so the story goes. This article in an industry trade journal discusses the reaction to these industry wide changes from the Electronic Transaction Association. Here you can listen to expert commentary on how card fee structures are changing in response to government regulations on debit.

Overall, if you accept lots of too-big-to-fail bank debit cards you should still come out ahead. If your customers don’t use debit cards, chalk these new fees up to more unintended consequences of government regulation.

Like his previous article discussing the merchant services industry, Michael Conticelli has done it again with a must read insightful report in the Ft. Myers Small Business Examiner titled “New trend in merchant statements hides rates and fees”.

Michael specifically calls out SunTrust for purposely redesigning their merchant statements to eliminate all rate and fee detail, leaving merchants no clue as to how charges are calculated. SunTrust made the decision to keep merchants in the dark about their “surcharge fees, bill backs, annual fees, PCI fees, etc.” because when merchants “don’t actually see the rates and fees month after month” they can’t ask questions.

Michael warns “Merchants need to be vigilant in monitoring their merchant fees.”

We couldn’t agree more! In fact, Vantage Card Services takes the exact opposite approach with our clients. Not only do we provide a very detailed merchant statement, we also provide our PayView analytics tool to help merchants explore stats and trends, chart their sales, manage their Interchange qualifications and track their effective "real rate" calculations month after month.

PayView is a user-friendly dashboard and analytics reporting tool that merchants can use to gain greater insight and more transparency into the cost of accepting card payments. This added layer of business intelligence empowers our clients with a greater understanding of where fees come from, best practices to keep costs down and a historic tracking of processing expenses.

Read more and take a tour at http://vantagecardservices.com/payview.

Vantage Card Services [+] is a new merchant services portal for our valued clients to track and redeem their Vantage Points Rewards, explore PayView reporting and trends and access Support Center resources.

Vantage is home to world-class payment solutions and features the best value package of price, terms, service, solutions and incentives available in the payments industry. This new merchant service [+] portal complements our Interchange [+] merchant rate pricing with PayView reporting.

PayView is a monthly reporting tool that has been developed to provide even greater transparency into your card payment acceptance. Use PayView to explore stats and trends, chart your sales, manage your Interchange qualifications and track your effective "real rate" calculations over time. We welcome you to log on or register for a demo of PayView now.

VantageCardServices.com is also the new home for Vantage Points Rewards. As a Vantage merchant, you earn Vantage Points when accepting card payments and for your referrals. Shop online and redeem your points for great rewards from hundreds of distinguished reward partners while also helping us raise money to support the fight against ALS.

Our passion is providing high quality payment processing solutions that exceed expectations. We are continuously working on improving our programs, technology and service offerings to provide the best value available anywhere in the payment industry. And the Vantage Card Services support center resources, Vantage Points Rewards and PayView Reporting are demonstrations of our continued commitment to our clients.

We Thank You for Choosing Vantage Merchant Services!

Update 3/3/2011: MasterCard is creating new small ticket Interchange charge types as discussed below but NOT introducing new rates. MasterCard is implementing these new buckets for small ticket likely so they can track the volume separately from other regulated debit transactions. We expect that companies like USA Tech will continue to opt out of accepting MasterCard debit until they lower the small ticket debit Interchange rate.

Vantage Card Services specializes in providing card payment processing services at direct and transparent Interchange pricing to merchants and businesses of all sizes.

For our B2B and B2G clients, VantageB2B.com is a resource focused on the payment acceptance policies, strategies and best practices to lower cost, increase productivity and enhance security. An integral part of our service is helping our clients manage Interchange qualifications when accepting commercial card payments. Given this B2B processing focus, we are particularly engaged with the recently announced Interchange modifications by Visa to become effective April 2012. We work with clients daily to establish and manage Level 3 merchant services. A significant number of Interchange modifications have been announced impacting Visa commercial card rates.

• Visa will make changes to their existing Corporate Card Level 3 and Corporate Electronic with Data Interchange programs.
• Visa will implement a new P-card product and associated Interchange Fee programs that will be available to commercial card issuers in the U.S.
• Visa is making changes to existing Interchange rates in their business, corporate, commercial and purchasing card categories as well with the most significant change coming for the Purchasing Card Large Ticket category that today requires a Visa registration fee.
• Visa will separate its non-regulated Business debit card from Business credit programs.

Another interesting and potentially significant change was announced from MasterCard. MasterCard will introduce new Regulated debit small ticket debit and credit Interchange programs in April 2012. While we don’t yet know the specific details, for companies like USA Technologies this is a welcome development.

Vantage is home to world-class payment solutions and features the best value package of price, terms, service, solutions and incentives available in the payments industry. For more information, follow Interchange developments as they happen here.

In an examiner.com article yesterday titled “Merchant service providers are the real winners under new debit fee caps”, Michael Conticelli highlights that processors are not required to pass on the lower Fed regulated debit Interchange rates – and because of this small businesses are not realizing the benefits of this legislation.

Thanks Michael for helping call attention to this small business issue. Ever since this debit Interchange debate started we have been advocating for small businesses because we knew that while they were held up as the face of this legislation by mega retailer lobbyist, that the system was rigged against them.

In October 2011 when the Fed debit rules went into effect, we posted "Durbin’s Debit a Trick or Treat for Small Merchants". Michael writes “Some banks and processors have tried to trick their business customers into thinking they are getting the savings passed on by lowering rates at only a fraction of the full savings.” To avoid the tricks, Michael advises “The only way a business can be sure you are getting ALL of the savings passed through is through the Interchange pass through pricing model.”

Two years before, in October 2009, Vantage wrote More Intelligent Merchant Rates, calling for all merchants to move to Interchange pass through pricing. The bottom line we posted “is that while the lawyers, lobbyist and politicians earn their living arguing over Interchange, merchants should take more immediate action on the things they can control today. Shop smart and choose your payment partner wisely.” In fact, since 2005, Vantage has monitored, recorded and reported on Interchange changes impacting merchants. All merchants, large and small, can get Interchange pass through pricing. And Vantage is passing all the Regulated Debit savings on to our clients (and released a study of the results by industry).

To receive a customized merchant Interchange rate quote instantly delivered to your inbox go to http://merchantrates.com.

It’s what all merchants are looking for; who doesn't want the “best merchant rates”? The real question for merchants is how to go about achieving this while avoiding the pitfalls of selecting a poor service provider.

To be the best, can you just claim it or buy the best domain name? The Best Merchant Rates may be an SEO search term, but a company name? Isn't that like naming your company “the best cola” instead of Coke or Pepsi? Do you trust a financial services company with a generic company name like “Merchant Services” or do you go with brand names like Bank of America or Costco?

For small businesses looking for the best merchant rates, turning to mega-banks and mega-retailers is not their best choice. For example, Bank of America Merchant Services advertises heavily with an asterisk. Interestingly this same bank, until public pressure forced it to change course, wanted to charge customers $5 a month to use a debit card. The Ellen Show posted this hilarious message from Bank of America. It would be funny if it wasn’t true of the mega bank approach to payment services. And Bank of America has been running commercials touting its "cash rewards" credit card “offering no annual fee, a $50 sign-up bonus, then a 1 to 3 percent cash refund on your spending”. Mega banks are trying to steer your customers to pay with credit cards over debit cards with the result that merchants will end up paying more in Interchange fees when accepting card payments. Sounds like a conflict of interest to us. Alternatively, will you turn to a mega retailer, who fought for lower Interchange for themselves but oddly isn’t passing the regulated debit Interchange on to the small businesses it’s marketing to? Costco’s fine print for its “rate-as-low-as” offer is followed by an asterisk that reads in part: “Rates listed are for qualified transactions. Reward cards process at a higher rate. A monthly minimum charge applies when qualified transaction fees and per-item charges are less than $20 per month… Rates and fees may change without notice...” etc. with even more fine print terms and conditions.

Does your search turn to the internet? What keyword phrase do you enter into your favorite search engine? Are you searching for the “best” merchant account or perhaps the “best” merchant service? And how will you know the best when you see it? To complete this task you will likely begin to get offers and compare discount rates and fees. In a merchant account comparison, how do you choose the best merchant services vendor for your business? Do you make a decision solely on the best merchant rate quote or do you take other factors into consideration?

Here is our best practice recommendation for all merchants to consider when shopping for merchant services:

1. Insist on an Interchange pass through pricing model (keyword search: “merchant Interchange rate quote”).
2. Insist on a month-to-month term (keyword search “month to month merchant account”).
3. Insist on open platforms verses proprietary processing systems designed to lock you into not being able to easily move to another vendor. Many providers sell (or worse…lease) proprietary bankcard terminals that will only work if you continue to process with them. Others follow this same model with payment gateways that once integrated into your point of sale or ecommerce platform leave you with a single processing choice (and we all know what happens to prices when there are no competitive pressures and no other choices).

Once you identify service providers that meet this criteria you can then begin your comparison. Important note, please don’t trust the “marketing” proposal but instead read all the fine print for yourself before you sign any application!

With so many credit card processing companies in the market, and without adequate knowledge of the payment industry, it can be hard to decide which merchant services provider is the best for your business. If you are shopping, please read these testimonials and include Vantage Card Services in your RFP. Vantage provides a host of online resources and personal consultations to help small business. On MerchantRates.com you can get an instant Interchange rate quote and customize the proposal specifically for your business. There is a buyer’s guide with frequently asked questions as well as numerous resources to help you gain a better understanding of the industry’s Interchange schedules.

Please share your experiences and most effective shopping strategy with us here.

As we head into the start of a new year, now is a good time to review your card processing procedures. Many of the highest Interchange rates result from transactions that downgrade for preventable reasons. Please take a moment to review your card acceptance procedures and follow best practices as they are important in qualifying your transactions at the very lowest Interchange rates available.

Here are the most common issues:

• If you are accepting key entered transactions, the most common cause of downgrades is due to missing AVS (address verification service) which looks to match the cardholder’s zip code at the time of authorization. Best practice: always enter the zip code. Check with your staff and your system to make sure you are entering and passing the zip code with each non-swiped card transaction.
• Other reasons for transactions to downgrade to higher Interchange rates include a mismatch of Authorization and Settlement dollar amounts (except in certain industries where tips are allowed) and forced/offline transactions in which a previously obtained authorization code is key-entered to settle a transaction. Transactions also fail to qualify for the best Interchange rates when transactions are not settled in a timely manner (typically 1-3 days depending on your industry). Best practice: settle your batch every day and avoid obtaining pre-authorizations.
• Non travel and entertainment merchants accepting commercial cards (Business, Corporate, Purchasing cards) should upgrade to a Level 3 payment gateway or virtual terminal. Level 3 refers to passing line item detail of the invoice with the standard payment data. Best practice: don’t use a retail terminal to process commercial cards. Vantage specializes in B2B transaction processing. Please contact us with any questions and visit http://vantageb2b.com for more information.

For personal assistance, give us a call at 800-397-2380 for a free consultation.