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Education

discount violations based on individual complaints.
Individual merchant adjudication would be futile in
dealing with the current state. Because of the disparity
in acquirers' perspectives, the card networks are taking
action.

The networks allege that some acquirers may be
allowing the following violations:
• Surcharge assessment on debit card transactions
• Surcharge amount in excess of acceptance cost
• Non-compliant surcharge disclosure signage
• Merchant not registered before commencing
surcharging
• Non-compliant deployment of cash discounting

I suspect this will force the cash discount programs to
be modified so that debit cards are excluded. Regardless
of how you feel about the Durbin Amendment, I
suggest not trying to finesse a fee on debit cardholders.
This will come to a head soon enough, and I expect
regulation to further detail how cash discounts may
or may not be applied against debit transactions. I
suspect, too, that some will be slow to recognize the
gravity of the situation, and the card networks will
make examples of them.

Remind me, what was our intent?
Both surcharge and cash discount programs are
designed to push customer transactions to pay with
cash and minimize card fees. Were all customers to pay
via cash, however, the business would be burdened
with security and physically counting, tracking and
banking cash. Cannabis retailers know all too well the
dangers inherent in managing large amounts of cash.
Reconciling, too, can be more burdensome if your
POS is not equipped to manage surcharge and cash
discounts.

Surcharges and cash discounts have their place in
our industry. They further merchant options and
differentiate programs. Acquirers should consider
the programs that are right for them and their clients.
Part of that consideration is fully understanding the
card brand rules and applicable laws and building
sustainable portfolios within those parameters.

As founder of Humboldt Merchant Services, co-founder of Eureka
Payments, and a former executive for such payments innovators as
WePay, a division of JPMorgan Chase, Ken Musante has experience
in all aspects of successful ISO building. He has also served as an
expert witness on numerous complex civil and criminal cases in pay-
ments, a service he provides, along with consulting on merchant ser-
vices and platforms, as founder of Napa Payments and Consulting,
www.napapaymentsandconsulting.com. Contact him at kenm@
napapaymentsandconsulting.com, 707 601 7656 or www.linke-
din.com/in/ken-musante-us/.

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