With the MasterCard increases going into effect in four days, and VISA just days behind, we thought we would remind you of what the changes are and what they may mean to you. In previous issues of The Green Sheet we've reported that this is the largest overall jump in interchange in years. While you may have sent out your notices to your customers weeks ago (or your processing bank has), we must all realize that literally hundreds of thousands of merchants are going to be upset. For perhaps the first time in years, they have been given a reason to reconsider their rate.
To ISOs, this means hundreds of thousands of merchants may be in play again. Of course, if you are an organization that is essentially static, this is potentially bad news. On the other hand, this could be good news to new organizations or those who have more to gain than to lose.
Eight issues ago (December 15 -I can't believe it is that far back) we published a detailed review of the interchange rate changes. Once again, the highlights are:
1 A .06% jump in best rate for both Visa and MasterCard (CPS Retail and Merit III).
2 The elimination of the CPS Retail 2 for Visaóthis means that key-entered Visa transactions will now qualify at EIRF.
3 EIRF is going up 6% and $.0l, so the increase for a Visa key-entered transaction is a jump from the best rate of l.31% to 1.81% and $.10-an increase of .50% and $.10-this one is really going to get our customers attention, so be ready.
4 MasterCard is also increasing their key-entered rate by .22% (from 1.41% and $. 10 to 1.63% and $. 10). They are also doing away with the Merit II name so this segment will be simply called "key-entered."
5 Both Visa and MasterCard are raising their MO/TO rates by .10%.
6 MasterCard is raising its standard interchange by .20%.
7 MasterCard will not allow travel agents to qualify for key-entered interchange.
These changes will open up a variety of markets for ISOs, including the bankcard accounts who previously would not talk to you. Keep in mind that the change may also help your other product sales. With increases from 6 to 50% in the raw rate, perhaps debit or check service will become more attractive to retailers. Maybe now they will consider another look.
Paul H. Green
Editor-in-Chief
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