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ETA And Visa Sparring Over New Fee Deadline

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The Electronic Transactions Association maintains that Visa Inc. did not give the acquiring industry sufficient notice of the new Fixed Acquirer Network Fee, but the card brand says it did.

In a March 7 letter to Visa’s chairman, Joseph Saunders, the Washington-based association complained of having just 36 working days to adjust to the fee’s technical requirements and public-relations fallout.

The letter’s 17 signers asked the card brand to provide guidance on the fee and push back the April 1 starting date until the industry had 90 days to interpret the guidance.

In a letter ISO&Agent Weekly obtained March 12, Saunders responded to the association, assuring its 450 member-companies the notification time was appropriate.

The association did not question Visa’s right to impose the levy, but it opposed the timing, says Greg Cohen, head of the association’s industry relations committee and president of U.S. operations at Toronto-based Moneris Solutions.

“We believe the brands should price as they want. It’s a free marketplace,” Cohen tells ISO&Agent Weekly. “But they should give our members a chance to implement the necessary technology and to communicate the situation to our merchants.”

Transaction processors have to make more technical changes to add a fee than to raise or lower an established fee, he notes. At the same time, ISOs and financial institutions are scurrying to meet contractual obligations to notify merchants of the fee and to tell third-party processors how they want to handle the change, Cohen says.

ISOs also have to perform complex analysis, decide whether to mark up the fee, teach employees how to handle the fee, and possibly hire help-desk workers to prepare for an expected avalanche of phone calls from merchants questioning or complaining about the fee, he contends.

Visa informed acquirers of the fee Feb. 9, just 36 working days before the deadline, according to the letter the association sent Saunders.

In “guiding principals” published early last year, the association asked the brands for at least 90 days’ notice of pricing changes. The letter to Saunders said association members found it difficult “to digest” what the signers called Visa’s “lack of regard.”

In his reply, Saunders said the card brand used a Visa Business News update published on July 28, 2011 to inform acquirers of plans to introduce the new variable fees. On Sept. 1, 2011, Visa used the same channel to publish a guide detailing the fee structure and reporting requirements, Saunders wrote.

“We have provided acquirers a nine-month window to test the Operating Certificate reporting process to ensure a seamless implementation well ahead of the April deadline,” the letter said. “In fact, the overwhelming majority of Visa acquirers provided data in January demonstrating readiness to implement the new structure.”

Visa issued the rates for the new fee on Feb. 9, Saunders added.

“We have engaged clients individually–many of them representing the ETA’s board member institutions–to discuss these important changes and provide assistance with process and implementation,” Saunders wrote.

As it now stands, merchant acquirers processing card-present transactions (except fast-food restaurants) will pay $2 per month per location for up to three locations, and up to $65 per location for more than 4,000 locations, according to reports.

Merchant acquirers processing high-volume card-present transactions will pay $2.90 per month per location for up to three locations, scaling up to $85 per location for merchants with more locations.

For acquirers processing “customer-not-present” transactions (excluding fast-food restaurants), monthly fees will begin at $2 for the smallest merchants, rising to $15 monthly for merchants with monthly gross sales of $8,000 to $39,000 a month. The fixed fee will scale up to $40,000 per month for merchants with more than $400 million in monthly gross sales.

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