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Vi
Visa's new third-par
Visa's new third-party registration fees – ty registration fees –
unintended consequences
unintended consequences
Under the current system, each acquirer would rather nder the current system, each acquirer would rather
B
By Ken Musantey Ken Musante U
not be the first to register a TPA. Those that wait don't
Eureka Pa
Eureka Payments LLCyments LLC not be the first to register a TPA. Those that wait don't
need to worr
need to worry about billing. Also, some acquirers can y about billing. Also, some acquirers can
I transmit, process or store card data. Often acquirers process or store card data. Often acquirers occurs when the first registering acquirer either no longer hen the first registering acquirer either no longer
u
unknowingly become responsible for an annual fee. This nknowingly become responsible for an annual fee. This
t has always been difficult to manage entities that has always been difficult to manage entities that
t
occurs w
transmit,
wishes to continue registration or when the first acquirer hes to continue registration or when the first acquirer
wis
are not aware of all the parties touching the data. e not aware of all the parties touching the data.
ar
i
I Nonetheless, they are responsible for managing Nonetheless, they are responsible for managing
automatically becomes responsible for the annual fee and y becomes responsible for the annual fee and
automaticall
third parties, regardless of whether they have contractual hird parties, regardless of whether they have contractual is purchased by another company. The second acquirer s purchased by another company. The second acquirer
t
ma
r relationships with those entities. elationships with those entities. may not have established a contractual ability or procedure y not have established a contractual ability or procedure
t
to bill the TPA.o bill the TPA.
R
Recent pricing changes from Visa Inc. will increase the costs ecent pricing changes from Visa Inc. will increase the costs
Many acquirers will work with unregistered TPAs, as
f for most acquirers for managing these relationships. This or most acquirers for managing these relationships. This Many acquirers will work with unregistered TPAs, as
long as the TPAs are listed as Payment Card Industry
c could cause some acquirers to limit the number of third ould cause some acquirers to limit the number of third long as the TPAs are listed as Payment Card Industry
Data Security Standard compliant. However, this does not
parties they work with, as well as increase the number of Data Security Standard compliant. However, this does not
parties they work with, as well as increase the number of
comply with card network rules. Should an issue occur at
unregistered entities.
unregistered entities. comply with card network rules. Should an issue occur at
a TPA, the card networks want to know which acquirers
a TPA, the card networks want to know which acquirers
are affected so they can fully address the situation.
Currently, both Visa and MasterCard Worldwide have are affected so they can fully address the situation.
Currently, both Visa and MasterCard Worldwide have
registration programs for third parties that touch card data,
registration programs for third parties that touch card data,
even if those parties have not established relationships Considering alternatives g alternatives
even if those parties have not established relationships
Considerin
with acquirers. Payment gateways, shopping carts and
with acquirers. Payment gateways, shopping carts and
hosting sites are examples of such companies. MasterCard Going forward, it will be even more costly for most TPAs forward, it will be even more costly for most TPAs
hosting sites are examples of such companies. MasterCard
Going
refers to these entities as Third Party Processors (TPPs) and and acquir
refers to these entities as Third Party Processors (TPPs) and
and acquirers to comply with Visa's rules. ers to comply with Visa's rules.
classifies them as Type 2 TPPs. Visa refers to these entities
classifies them as Type 2 TPPs. Visa refers to these entities
generally as Third Party Agents (TPAs), but specifically as Perhaps a better way to incent compliance and enhance erhaps a better way to incent compliance and enhance
generally as Third Party Agents (TPAs), but specifically as
P
Merchant Servicers (MSs).
Merchant Servicers (MSs). revenues would be to eliminate the initial registration fee evenues would be to eliminate the initial registration fee
r
and lower t
and lower the renewal amount to a nominal level, while he renewal amount to a nominal level, while
having a stated fee schedule for noncompliance. Though aving a stated fee schedule for noncompliance. Though
Addressin h
Addressing inequitiesg inequities
no one wants to
no one wants to build a revenue model on noncompliance, build a revenue model on noncompliance,
doin
Both card brands require that acquirers register these third h card brands require that acquirers register these third
Bot doing so would increase compliance and registration. g so would increase compliance and registration.
p
parties, but their fee structures differ. MasterCard doesn't arties, but their fee structures differ. MasterCard doesn't
I
r require a fee for Type 2 TPPs. Currently, Visa requires all equire a fee for Type 2 TPPs. Currently, Visa requires all In today's environment, if a payment gateway is working n today's environment, if a payment gateway is working
with 50 acquirers, there is one $5,000 Visa registration fee h 50 acquirers, there is one $5,000 Visa registration fee
parties utilizing TPAs to register each TPA. But it only arties utilizing TPAs to register each TPA. But it only wit
p
and one $2,500 V
r
requires a fee from the first acquirer registering a given equires a fee from the first acquirer registering a given and one $2,500 Visa renewal fee. After Nov. 1, each of those isa renewal fee. After Nov. 1, each of those
50 acquirers will pay a $1,000 Visa registration fees (for ers will pay a $1,000 Visa registration fees (for
TPA. The first acquirer pays both the initial fee and the A. The first acquirer pays both the initial fee and the
TP 50 acquir
$
annua $50,000) and a $1,000 Visa renewal fee (again for $50,000). 50,000) and a $1,000 Visa renewal fee (again for $50,000).
annual renewal fee.l renewal fee.
This is a significant increase in revenues for Visa and a his is a significant increase in revenues for Visa and a
Visa's system created inequities. As a result, the company T
Visa's system created inequities. As a result, the company
c
is changing its fee policy, effective Nov. 1, 2013. The change corresponding cost increase to either TPAs or acquirers. orresponding cost increase to either TPAs or acquirers.
is changing its fee policy, effective Nov. 1, 2013. The change
And, if there are acquirers who do not register TPAs today,
is being implemented for many TPA types, but this article And, if there are acquirers who do not register TPAs today,
is being implemented for many TPA types, but this article
t
focuses on the MS category, which includes payment
focuses on the MS category, which includes payment that number will grow with the implementation of the hat number will grow with the implementation of the
new fee
gateways, shopping carts and hosting companies. new fee schedule. schedule.
gateways, shopping carts and hosting companies.
P
The change in Visa's registration fees – for the MS category Perhaps a better change would be if more hosting erhaps a better change would be if more hosting
The change in Visa's registration fees – for the MS category
– are as follows:
– are as follows: c companies, shopping carts and other related businesses ompanies, shopping carts and other related businesses
would modify their processes so they do not touch
would modify their processes so they do not touch
c
Current
Current cardholder data.ardholder data.
Initial – first acquirer only............................ $5,000
Initial – first acquirer only ............................ $5,000
Regardless, unless the TPAs reimburse acquirers for the
Renewal – first acquirer only ....................... $2,500 Regardless, unless the TPAs reimburse acquirers for the
Renewal – first acquirer only .......................$2,500
fees, small acquirers may opt to not work with certain
fees, small acquirers may opt to not work with certain
TPAs. TPAs with significant market strength can simply
Effective Nov. 1
Effective Nov. 1 TPAs. TPAs with significant market strength can simply
tell acquirers they will not be paying TPA fees and leave it
Initial – all acquirers ..................................... $1,000
Initial – all acquirers ..................................... $1,000 tell acquirers they will not be paying TPA fees and leave it
to the acquirers to determine whether they should proceed
Renewal – all acquirers .................................$1,000 to the acquirers to determine whether they should proceed
Renewal – all acquirers ................................. $1,000
with those TPAs.
with those TPAs.
28
28
Vi
Visa's new third-par
Visa's new third-party registration fees – ty registration fees –
unintended consequences
unintended consequences
Under the current system, each acquirer would rather nder the current system, each acquirer would rather
B
By Ken Musantey Ken Musante U
not be the first to register a TPA. Those that wait don't
Eureka Pa
Eureka Payments LLCyments LLC not be the first to register a TPA. Those that wait don't
need to worr
need to worry about billing. Also, some acquirers can y about billing. Also, some acquirers can
I transmit, process or store card data. Often acquirers process or store card data. Often acquirers occurs when the first registering acquirer either no longer hen the first registering acquirer either no longer
u
unknowingly become responsible for an annual fee. This nknowingly become responsible for an annual fee. This
t has always been difficult to manage entities that has always been difficult to manage entities that
t
occurs w
transmit,
wishes to continue registration or when the first acquirer hes to continue registration or when the first acquirer
wis
are not aware of all the parties touching the data. e not aware of all the parties touching the data.
ar
i
I Nonetheless, they are responsible for managing Nonetheless, they are responsible for managing
automatically becomes responsible for the annual fee and y becomes responsible for the annual fee and
automaticall
third parties, regardless of whether they have contractual hird parties, regardless of whether they have contractual is purchased by another company. The second acquirer s purchased by another company. The second acquirer
t
ma
r relationships with those entities. elationships with those entities. may not have established a contractual ability or procedure y not have established a contractual ability or procedure
t
to bill the TPA.o bill the TPA.
R
Recent pricing changes from Visa Inc. will increase the costs ecent pricing changes from Visa Inc. will increase the costs
Many acquirers will work with unregistered TPAs, as
f for most acquirers for managing these relationships. This or most acquirers for managing these relationships. This Many acquirers will work with unregistered TPAs, as
long as the TPAs are listed as Payment Card Industry
c could cause some acquirers to limit the number of third ould cause some acquirers to limit the number of third long as the TPAs are listed as Payment Card Industry
Data Security Standard compliant. However, this does not
parties they work with, as well as increase the number of Data Security Standard compliant. However, this does not
parties they work with, as well as increase the number of
comply with card network rules. Should an issue occur at
unregistered entities.
unregistered entities. comply with card network rules. Should an issue occur at
a TPA, the card networks want to know which acquirers
a TPA, the card networks want to know which acquirers
are affected so they can fully address the situation.
Currently, both Visa and MasterCard Worldwide have are affected so they can fully address the situation.
Currently, both Visa and MasterCard Worldwide have
registration programs for third parties that touch card data,
registration programs for third parties that touch card data,
even if those parties have not established relationships Considering alternatives g alternatives
even if those parties have not established relationships
Considerin
with acquirers. Payment gateways, shopping carts and
with acquirers. Payment gateways, shopping carts and
hosting sites are examples of such companies. MasterCard Going forward, it will be even more costly for most TPAs forward, it will be even more costly for most TPAs
hosting sites are examples of such companies. MasterCard
Going
refers to these entities as Third Party Processors (TPPs) and and acquir
refers to these entities as Third Party Processors (TPPs) and
and acquirers to comply with Visa's rules. ers to comply with Visa's rules.
classifies them as Type 2 TPPs. Visa refers to these entities
classifies them as Type 2 TPPs. Visa refers to these entities
generally as Third Party Agents (TPAs), but specifically as Perhaps a better way to incent compliance and enhance erhaps a better way to incent compliance and enhance
generally as Third Party Agents (TPAs), but specifically as
P
Merchant Servicers (MSs).
Merchant Servicers (MSs). revenues would be to eliminate the initial registration fee evenues would be to eliminate the initial registration fee
r
and lower t
and lower the renewal amount to a nominal level, while he renewal amount to a nominal level, while
having a stated fee schedule for noncompliance. Though aving a stated fee schedule for noncompliance. Though
Addressin h
Addressing inequitiesg inequities
no one wants to
no one wants to build a revenue model on noncompliance, build a revenue model on noncompliance,
doin
Both card brands require that acquirers register these third h card brands require that acquirers register these third
Bot doing so would increase compliance and registration. g so would increase compliance and registration.
p
parties, but their fee structures differ. MasterCard doesn't arties, but their fee structures differ. MasterCard doesn't
I
r require a fee for Type 2 TPPs. Currently, Visa requires all equire a fee for Type 2 TPPs. Currently, Visa requires all In today's environment, if a payment gateway is working n today's environment, if a payment gateway is working
with 50 acquirers, there is one $5,000 Visa registration fee h 50 acquirers, there is one $5,000 Visa registration fee
parties utilizing TPAs to register each TPA. But it only arties utilizing TPAs to register each TPA. But it only wit
p
and one $2,500 V
r
requires a fee from the first acquirer registering a given equires a fee from the first acquirer registering a given and one $2,500 Visa renewal fee. After Nov. 1, each of those isa renewal fee. After Nov. 1, each of those
50 acquirers will pay a $1,000 Visa registration fees (for ers will pay a $1,000 Visa registration fees (for
TPA. The first acquirer pays both the initial fee and the A. The first acquirer pays both the initial fee and the
TP 50 acquir
$
annua $50,000) and a $1,000 Visa renewal fee (again for $50,000). 50,000) and a $1,000 Visa renewal fee (again for $50,000).
annual renewal fee.l renewal fee.
This is a significant increase in revenues for Visa and a his is a significant increase in revenues for Visa and a
Visa's system created inequities. As a result, the company T
Visa's system created inequities. As a result, the company
c
is changing its fee policy, effective Nov. 1, 2013. The change corresponding cost increase to either TPAs or acquirers. orresponding cost increase to either TPAs or acquirers.
is changing its fee policy, effective Nov. 1, 2013. The change
And, if there are acquirers who do not register TPAs today,
is being implemented for many TPA types, but this article And, if there are acquirers who do not register TPAs today,
is being implemented for many TPA types, but this article
t
focuses on the MS category, which includes payment
focuses on the MS category, which includes payment that number will grow with the implementation of the hat number will grow with the implementation of the
new fee
gateways, shopping carts and hosting companies. new fee schedule. schedule.
gateways, shopping carts and hosting companies.
P
The change in Visa's registration fees – for the MS category Perhaps a better change would be if more hosting erhaps a better change would be if more hosting
The change in Visa's registration fees – for the MS category
– are as follows:
– are as follows: c companies, shopping carts and other related businesses ompanies, shopping carts and other related businesses
would modify their processes so they do not touch
would modify their processes so they do not touch
c
Current
Current cardholder data.ardholder data.
Initial – first acquirer only............................ $5,000
Initial – first acquirer only ............................ $5,000
Regardless, unless the TPAs reimburse acquirers for the
Renewal – first acquirer only ....................... $2,500 Regardless, unless the TPAs reimburse acquirers for the
Renewal – first acquirer only .......................$2,500
fees, small acquirers may opt to not work with certain
fees, small acquirers may opt to not work with certain
TPAs. TPAs with significant market strength can simply
Effective Nov. 1
Effective Nov. 1 TPAs. TPAs with significant market strength can simply
tell acquirers they will not be paying TPA fees and leave it
Initial – all acquirers ..................................... $1,000
Initial – all acquirers ..................................... $1,000 tell acquirers they will not be paying TPA fees and leave it
to the acquirers to determine whether they should proceed
Renewal – all acquirers .................................$1,000 to the acquirers to determine whether they should proceed
Renewal – all acquirers ................................. $1,000
with those TPAs.
with those TPAs.
28
28
