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as well as long-standing Visa and Mastercard rules, in
Insider’sreport addition to running foul of several state laws.
on payments Perceptions are everything

Will Visa kill cash Now this may not be a popular position in the merchant
acquiring space, but I believe cash discounting is a good
idea. Merchants have long complained about the cost
discounting? of processing card payments. Offloading the costs on
customers who gain the most by paying with cards
may quash those complaints. Besides, consumers have
By Patti Murphy demonstrated a strong willingness to help small merchants,
especially since the onset of the COVID pandemic.
ProScribes Inc.
I've raised this argument with ISOs and agents recently and
erceptions count for a lot. In 2020 and 2021, there received a curious response from some: if merchants aren't
was a perception—put forth by retailers and paying the costs—or, perhaps more accurately, if merchants
their allies in Congress—that by raising inter- aren't around to make a fuss about interchange—Visa and
P change rates as they regularly do each April and Mastercard may be tempted to raise interchange even
October, Visa and Mastercard would be sticking it to mer- higher.
chants already struggling with the financial fallout from
COVID restrictions. Really? Interchange rates in the United States are among
the highest in the world. Analyses by the Kansas City Fed
Now it's Visa's turn to play the perception card. The card found higher average interchange rates in just a handful
giant is raising concerns about cash discounting and of countries, Moldova, Kyrgyzstan, Georgia and Russia
surcharging. In a memo sent to several acquirers in March among them.
2022, Visa revealed that it has dispatched secret shoppers
across the country who have found merchants that appear If interchange keeps going up and card-paying consumers
to be out of compliance with its rules for surcharging and are footing the bill, either as a surcharge or because of cash
cash discounting. Violations identified include: discount programs, it isn't going to look good. It creates the
• Merchants surcharging credit card transactions perception that a large company (Visa or Mastercard) is
without first notifying Visa, sticking it to consumers—consumers those very companies
• Merchants surcharging debit card transactions, have spent years encouraging to use plastic instead of
paper.
• Surcharge amounts that exceed the cost of accep-
tance, One possible outcome is that consumers and merchants
• Surcharging disclosure signs that don't meet Visa will move more transactions to cheaper electronic payment
requirements, and alternatives, which become all the more viable as the
• Non-compliant cash discounting programs. United States moves closer to real-time payments. Another
is government intervention. The industry has already had
a taste of that, with Durbin Amendment caps on debit card
A copy of an acquirer memo I came across said the acquirer interchange.
had 60 days to review all of its merchant accounts to ensure
compliance with Visa's surcharging and cash discounting While merchants have made noise in Washington over
rules. Visa also requested the names and websites of rising interchange, it's hard to rile up lawmakers about
all the acquirer's ISOs offering cash discounting and/or the fees one category of businesses (the card networks and
surcharging, so that Visa can further confirm compliance card-issuing banks) charges another (merchants). Sure,
with its rules. probably 20 million small businesses pay interchange fees
related to card payments, but so do a lot of big businesses,
Not surprisingly, the memos created significant conster- like retailing behemoths Walmart and Amazon.
nation in the ISO community, with some suggesting the
days of cash discounting are numbered. Wrong. Visa may U.S. consumers with credit and/or debit cards number about
have problems with the way some merchants do cash dis- 200 million. If even a fraction of these consumers were to
counting, but it can't take issue with the idea. The Durbin complain to their elected officials about rising interchange,
Amendment to the 2010 Dodd-Frank Act specifies that the it could have a much bigger impact. Watch this space.
card networks cannot prohibit merchants from offering in-
centives for using a particular form of payment, like cash.
Patti Murphy is senior editor at The Green Sheet and self-described pay-
Surcharging is a different matter. Surcharging debit card ments maven of the fourth estate. Follow her on Twitter @GS_PayMaven
payments is prohibited under the Durbin Amendment,

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