How Visa’s new rules impact business in 2023
By Allen Kopelman, CEO, Nationwide Payment Systems
As we all know, consumers like to have choice in how they pay and merchants have no choice but to pay heavily for those options. In recent years, we’ve seen complaints and even lawsuits that seek injunctive relief from Visa and other payment card brands for ever-higher interchange rates and processing fees.
Enter cash discount programs designed to help offset related costs of credit card processing. These programs have been challenged in courts by card brands, lobbyists and regulators, but are gaining traction across all 50 states. Simply put, the Supreme Court has ruled that rewarding cash-paying customers with lower pricing is a form of free speech and is therefore protected by the Constitution.
Credit card surcharging, on the other hand, adds a convenience charge of up to 4 percent to credit card transactions. Visa wants to lower that to 3 percent. This may not seem like much to onlookers who are not familiar with all the nuances of credit card processing, but this single percentage point could add up to billions in losses for merchants and service professionals.
Here’s what you need to know about Visa’s merchant services initiatives in 2023:
We recently covered this topic in Episode 154 of our B2B Vault podcast and some of the new rules introduced in April 2023 are already in effect. Here are some highlights:
Credit card surcharge cap: Lowering surcharge fees from 4 percent to 3 percent could impact the livelihood of millions of payment professionals. If you’re in this class, you need to make sure your cash discount and/or credit card surcharging program complies with all state and federal guidelines to avoid costly fines and protect your merchant customers.
EMV non-compliance charge: Assessing a ten-cent non-compliance fee on all transactions for merchants with fallback rates of ten percent or more could potentially shutter small and midsize businesses. If you are working with merchants whose equipment is failing to read the chips on EMV contact and contactless cards and defaulting to a magnetic stripe reader, you need to help them fix or replace their hardware. Address this issue right away and help them avoid this costly assessment.
Chargeback relief for ecommerce merchants: Offering a new way for ecommerce merchants to fight first-party fraud, Visa launched Compelling Evidence 3.0, a program that taps into transaction histories to prove transactions are legitimate.
Rapid dispute resolution (RDR): Introducing a new way to reduce chargebacks, Visa rolled out RDR, a relatively new program that some processors offer and others do not. If a disputed transaction is refunded, a chargeback is no longer needed. Merchants can evaluate reason codes and dollar amounts to decide which disputes they are willing to accept. The transactions they pass on, such as digital products and subscription service orders, can be capped at $15 to $20 or $35 to $50 each.
As we all know, digital commerce is constantly changing. Let’s work directly with merchants to help them evaluate these new initiatives to meet regulatory and compliance guidelines and optimize revenue streams.
For more information on this and other topics, visit https://b2bvault.info/.
Allen Kopelman co-founded Nationwide Payment Systems Inc. in 2001, providing concierge-style credit card processing and equipment to merchants. The company quickly grew nationally, adding products and banking partnerships and becoming laser-focused on technology. As a serial entrepreneur from a family of business owners, Allen first learned about business by working behind the cash registers at his father’s Miami clothing stores. In 2021, he launched the B2B Vault: The Payment Technology Podcast, where he educates merchants, drawing from his experiences as a payments industry consultant, master chef at hotels and country clubs, and former owner of a restaurant and catering company.