Page 27 - GS230801

CoverStory

Today just two states—Connecticut card brand rules. Visa is said to have dispatched secret shoppers to seek out
and Massachusetts—prohibit non-compliant merchants and imposed fines on the acquiring banks.
surcharging, and a cottage industry
has emerged to develop software and "In the ISO industry we have a chain of responsibility for implementing
solutions that support "compliant" compliant programs," Dunn said, adding there's a potential ripple effect when
surcharging. fines get handed out. "If ISOs and agents get stuck with fines because the
Surcharging merchants must comply merchants they signed up are out of compliance, it will have a significant effect
with myriad disparate state laws as on how the programs are sold and implemented," he said.
well as card-brand rules. Among the
more common requirements: clear But sponsor banks differ, said James Shepherd, founder and CEO of ISO Amp,
signage, the surcharge amount has an SaaS solution for statement analysis. "Some pass the fines on; others don't."
to be clearly stated on both customer
and merchant receipts, and the fee Visa is especially disdainful of cash discounting programs that use "non-cash
cannot exceed the merchant's actual adjustments" at checkout. "A merchant offering cash discounts needs to go
cost of acceptance. through and change the shelf pricing for every item to display both the cash
and card price. Then, without question it would be compliant" in Visa's eyes,
Earlier this year, Visa lowered Shepherd said.
the permissible surcharge rate for
U.S. merchants to 3 percent from "Surcharging is not going away and neither is cash discounting," noted Ken
4 percent. Asked about the move Musante, of Napa Payments and Consulting. "What we are seeing is a codifying
during a July 25 call with analysts, of how it can be done. This lends credibility and protection as it defines the
Visa CEO Ryan McInerney said "It's acceptable practices and disclosures."
no surprise that we don't feel great"
about surcharging. The new cap, he Patti Murphy, senior editor at The Green Sheet, has been following and writing about payments
responded, is to make sure "that when for 40 years and has been working with The Green Sheet for 25 years. Patti is also co-host of the
consumers do get surcharged it's
something that's fair and equitable." Merchant Sales Podcast. Follow her on LinkedIn at www.linkedin.com/in/patti-murphy-1082911.

Surcharging, and its corollary, cash
discounting, eliminate interchange
as a merchant pain point, by shifting
the cost to consumers who pay with
bankcards.

These dual pricing arrangements are
also good for ISOs and agents, as the
residuals are substantially higher HOLIDAY PAYMENT
than with traditional pricing models,
like tiered pricing and interchange-
plus. Most cash discount programs, SOLUTIONS
for example, assess a 4 percent
charge on card payments, allowing
for plenty of margin on transactions. ACH • LEVEL III • EMV
"Cash discounting and surcharging
have reinvigorated the industry, and
have effectively derailed the race to WEB • RECURRING
zero," Apgar said.
CASH DISCOUNT
These dual pricing arrangements
"have made ISOs a lot of money and
save merchants big bucks," Dunn CUSTOMER DATABASE
said. "However, it seems the card
brands are not too pleased with how
these forms of cost-shifting have been C A L L F O R A D E M O
implemented."
8 0 0 - 2 9 6 - 4 8 1 0
Dunn noted that some sponsor banks
have been fined for dual pricing
programs that do not comply with

27