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Friday, October 19, 2018

Visa's bulletin on cash discounting: clarification, war or both?

Y esterday, Visa Inc. issued "Cash Discounting and Discount Offers Explained," a new bulletin devised to clarify what is and is not permitted under Visa Rules for cash discount programs. Visa stated that because of the increasing popularity of cash discount or discount offer programs, Visa is "reminding U.S. acquirers, merchants, processors and agents that discount offer programs should be evaluated to ensure compliance with the Visa Rules."

That sounds straightforward enough, and Jonathan Razi, CEO of CardX, said his company welcomes Visa's guidance. "Visa's bulletin gives our industry much-needed clarity: 'cash discount' is not a loophole within the rules, and merchants that add a fee at the point of sale must comply with the requirements for surcharging, regardless of what they call the fee," he told The Green Sheet.

Razi believes Visa's clarification will "not only help customers avoid unfair fees charged to debit cards, but also help merchants and sales professionals know what to look for in a compliant solution."

James Shepherd CEO at CCSalesPro and co-host of the Merchant Services Podcast, warned that Visa's move is a "declaration of war" on cash discounting service fees. He stated the bulletin "made it clear that Cash Discounting as it exists in the merchant services industry is not compliant with Visa Rules."

Shepherd cited text within the bulletin that supports his conclusion. "Models that encourage merchants to add a fee on top of the normal price of the items being purchased, then give an immediate discount of that fee at the register if the customer pays with cash or debit card, are NOT compliant with the Visa Rules and may subject the acquirer to non-compliance action," Visa wrote.

Three approaches to Visa's move

According to Shepherd, ISOs offering cash discounting programs that fit Visa's description above have three options:

  1. Ignore this bulletin out of a belief that Visa rules are unconstitutional and thus unenforceable. "This is an interesting approach and my guess is that much of the industry will go this route," he stated. "This will force Visa to take the 'non-compliance action' that they threaten in the bulletin and take one of the major acquirers to court. This will most likely be a long and drawn out court battle and would carry a huge risk for Visa. If the courts were to side with the acquirer, it would nationalize the concept of service fees on credit card transactions."

  2. Pivot to a new model that would take these programs outside the scope of Visa rules. "Imagine a scenario where there was an energy shortage in a particular geographic area," Shepherd said. "This caused a temporary spike in energy prices that effected local merchants. Now imagine that those same merchants decided to implement a surcharge or service fee on all transactions (Cash and Credit) during this time of 4 percent and put up a sign at the counter stating, 'Due to increases in energy prices, we have temporarily implemented a service fee of 4 percent on all purchases.' Would this action be covered under the Visa Rules? I cannot imagine how it could be."

    Believing the concept of providing a discount to pay with cash is clearly protected nationally by the Durbin Amendment, Shepherd suggested the industry could pivot to cash discounting by instructing merchants to run all transactions through the terminal and create a program that added the service fee to all transactions. "When the merchant paid in cash, the receipt would print out with the service fee and directly below that, the cash discount," he stated, "The service fee line item would exist on every transaction receipt, provided to the merchant. The merchant would then post a sign that said, 'Due to increased costs to process credit card payments, we have implemented a 4 percent service fee on all transactions.' Then, on a separate sign, it could offer the cash discount."

  3. Switch to a surcharging model. Following release of Visa's bulletin, Shepherd and Razi spoke about its implications. Through legal action, CardX "has helped to establish surcharging as a legal option in California, Florida, Texas, and they hope to soon win their case in New York," Shepherd noted. "If they do, Jonathan believes it is possible that surcharging will be legal in all 50 states by the end of next year."

    Shepherd added that cash discounting programs were primarily created to pass on the cost of processing to consumers in states where surcharging was illegal and to do so on card types, such as check and credit cards, where surcharging was not permitted under Visa rules. "Now that so many of the big states are back in play with surcharging, it might be worth a second look," he said. "It is 100 percent compliant with Visa rules and you could sign up merchants without any fear that they would be forced to change tactics down the road."

Shepherd's views on both the bulletin and these three options are more fully explained in his blog post at http://www.ccsalespro.com/visa-declares-war-cash-discounting-service-fees/ .

Time to be proactive

Evan Weese, marketing lead for CardX, noted that First Data Corp. decided in September 2018 to remove all "cash discount" programs from the Clover marketplace. "A 'true cash discount' does not add any fees or surcharges at the register," the company wrote in an email to users at the time.

"We expect this [Visa's] bulletin to send a shockwave through the payments industry, because many merchants who are using 'cash discount' programs will now have to find a complaint solution for passing on their credit card fees to customers," Weese said. "This will be extremely frustrating for ISOs and agents as well, since today's Visa bulletin suggests their portfolios will be at risk of fines or shutdowns unless they take action to bring these accounts into compliance with the rules for credit card surcharging."

Razi concurred, adding, "This is why we've invested in developing products that put compliance first and meet these requirements automatically."

"In the coming weeks and months, I am sure that we will see announcements coming from the major acquirers about their position on cash discount programs, so make sure you are aware of changes as they happen," Shepherd advised. "Don't keep selling your current program, hoping nothing bad will happen to you or your merchants. Be proactive, gather information and decide how you will respond to this change in the payments landscape."


NAC2018 celebrates independent ATM deployers
Friday, October 19, 2018

M ore than 650 ATM industry stakeholders attended The National ATM Council's sixth annual convention and expo held Oct. 16 to 18 at Bally's Las Vegas. Bruce Renard, executive director at NAC, attributed the not-for-profit association's year-over-year growth to its hard-working staff and committee members and an expanding roster of sponsors, exhibitors, members and supporters.

Renard additionally thanked NAC members who participated in the council's "ATMs across America" initiative. These individuals traveled to Washington, D.C., many from across the country at considerable expense, to meet with key policymakers, he noted. Their input provided federal bank regulators and ranking members of Congress with insight into ATM-related issues, he said.

George Sarantopoulos, chair of NAC's board of directors and CEO of Access One, said progress has been made on many fronts but NAC's work is not done. Independent ATM deployers (IADs) and operators continue to face bank closures and legislative challenges. "We also are remaining ever vigilant to thwart adverse state and local legislation and ordinances that continue to pop up around the country and target our industry," he stated.

Visa to support DCC

Visa Inc. executives Goran Ribar, director, global strategic initiatives, and Hitesh Patel, senior director, global commercial planning and analysis, presented Visa's new global policy of authorizing dynamic currency conversion (DCC) at U.S. ATMs. The card brand has supported DCC in other global markets and will support the practice in the United States beginning in April 2019. NAC's recent petition to Visa in support of DCC was a contributing factor in the decision; enabling DCC in U.S. ATMs will be an attractive addition to Visa's other value-added services, they stated.

"This is very exciting news that Visa will enable DCC globally," Ribar stated. "In evaluating all aspects of the decision, one concern was that [Visa] cardholders would have a suboptimal experience, but we mitigated that concern by putting together a comprehensive program that will require processors to certify their solutions before offering DCC."

Ribar expects the program to be a win-win for all participants, providing consumers with pricing transparency and ATM acquirers and operators with additional revenue streams. "Cardholders must be able to view all relevant information and have a record of the transaction when they leave the premises," he added.

Diverse topics, entertainment

NAC members were entertained by mentalist/hypnotist Keith Barry and informed in other presentations about new opportunities in bitcoin and cryptocurrencies, gaming and sports betting. Flash demonstrations provided additional insights into a variety of emerging technologies. Following are additional conference highlights:

NAC Security Academy

NAC security committee chair Stephen Joseph, business development manager, banking and finance at viceo surveillance provider Axis Communications, introduced an array of security discussions as part of NAC's Security Academy program. Speakers included:

NAC2019 and beyond

Sarantopoulos said next year's conference will be held Oct. 15 to 17, 2019 at Planet Hollywood Resort and Casino in Las Vegas. He urged NAC members to help the organization address the ATM industry's most pressing issues and establish a grass roots network that protects the business interests of the entire ATM industry value chain.

NAC's conference series reflects the diversity, technology and resilience of ATM operators, Sarantopoulos noted. The theme "ATMs across America" celebrates our unified industry progress and each member's individual contributions. "We have managed to survive the challenging introduction of EMV [Europay, Mastercard and Visa] in America," he stated. "Little did we know that our greatest challenge would turn out to not to be EMV, but instead just being able to keep a bank account."


Colorado store takes convenience to the next level
Wednesday, October 17, 2018

A Colorado convenience store chain has announced a new format that morphs the features of a convenience store with the product selection of a natural grocery and a fast casual restaurant. Plus there will be a mobile app that allows customers to order and pay ahead of time. In a recent press release, executives at the company, Choice Market, hailed the new format as "disruptive."

A new 2,700 square foot Choice Market store, slated to open in Denver in 2019, will include a 2,700 square foot c-store, as well as fuel pumps, electric vehicle supercharging stations, a bike-share terminal and electric scooter charging stations, the company said. Customers will have the option to skip the checkout process entirely, order and pay ahead of time with the Choice Mobile App. Shoppers who wish to pay at time of checkout via in-store POS will be able to do so. The company said it also expects to become one of the first in the state to make beer deliveries once a pending change in Colorado's liquor laws takes hold.

"There's nothing more valuable than our customers' time, and we are really excited to offer this new format which allows them to combine several different shopping occasions in one stop, while providing them with the option to skip the checkout process altogether," said Mike Fogarty, founder and CEO of Choice Market. "If a customer cannot make it to the store, we will deliver any of our products to their doorsteps within 45 minutes. That is true convenience," he added.

Choice partnered with AVA Retail on the project. AVA leverages artificial intelligence and the Internet of Things (IoT) to support cashierless checkouts. Last year, Mastercard revealed it was working with AVA to pilot new retail and working environments. "This collaboration is a great example of how we can couple our rich set of payment, security and analytic capabilities with AVA retail's IoT assets to help retailers deploy unique experiences today," Mastercard senior vice president Stephane Wyper said at the time.


Half of B2B sales reps fear making cold calls, survey finds
Tuesday, October 16, 2018

I t will come as no surprise to most merchant level salespeople in the payments industry that recent research conducted by Selling Power on behalf of ValueSelling Associates Inc. found reaching prospects is the top challenge salespeople face in setting up initial meetings. Fifty-four percent of initial meetings required more than five touch points to secure an appointment. This applies to both phone and in-person meetings.

The study, titled B2B Prospecting Challenges: From the Front Lines, surveyed 160 sales professionals in a variety of roles ‒ including chief sales officers; vice presidents and senior vice presidents of sales; and sales reps, managers and directors.

"Nearly 6 in 10 respondents stated that getting the prospect to respond was the biggest challenge (59%), followed by access to the real decision maker (46%), finding the correct contact person in the company (32%), and getting a referral or introduction (25%)," researchers wrote.

Key issues

Administrative issues identified were getting accurate contact information, finding a mutually convenient time on the prospect's calendar, and coordinating an initial conversation with multiple team members, researchers stated.

According to respondents, the three most essential skills for connecting with new prospects are: doing research to identify target prospects who are decision makers; getting to an introduction via referral; and face-to-face networking.

Other key findings identified in the report include that one out of two B2B sales reps fear making cold calls; the most effective method of reaching prospects was client referrals followed by cold calls; organization, consistency, and persistence are foundational skills for effective prospecting; only 18 percent of sales reps spent nine hours or more on prospecting each week; and repeated, incremental training specifically on prospecting and setting up initial meetings is essential for success.

The full 23-page report is available for download at www.valueselling.com/b2b-prospecting-challenges-report .


Apple Pay leads pack with mobile users
Friday, October 12, 2018

A pple Pay is the go-to digital wallet for most debit card users. This is according to new data from Auriemma Consulting Group. An Auriemma study of debit card issuers indicates that Apple Pay makes up 77 percent of mobile wallet transactions, leaving little market share for competitors Samsung Pay and Google Pay, which account for 17 percent and 6 percent of mobile wallet payments respectively.

Anita Solaman, director of Auriemma's Debit Management Roundtable, said high usage rates for Apple Pay may be a matter of demographics. "Apple users skew younger, and younger consumers are more likely to be debit [card] users," she said.

Financial institution support also plays a role, Solaman suggested. While large financial services companies tend to focus on issuing credit cards, debit cards are a core offering of most regional banks and credit unions. Debit-focused issuers see Apple Pay and other mobile wallet apps presenting opportunities to drive more customer engagement. "Regional banks with large debt card portfolios are driving top-of-wallet usage," Solaman said. "That means embracing mobile and digital options, particularly for younger customers."

Mobile wallets also allow these smaller issuers to go toe-to-toe with larger issuers that have developed their own branded wallets, like JPMorgan Chase's Chase Pay app. Evidencing this trend, Solaman noted that many smaller banks and credit unions are encouraging customers to load mobile wallets onto their devices during the account-opening process. "Provisioning a card has become part of the onboarding process," she said.

Samsung wallet users more engaged

Apple Pay's dominance in terms of wallet share doesn't necessarily equate to more transactions per user. Auriemma's study found Samsung Pay users to be more engaged, making an average 7.3 transactions a month compared to 5.5 transactions a month for Apple Pay and Google Pay users.

Solaman believes this may because Samsung has cast a wider technology net. Unlike Apple Pay and Google Pay, which work only with NFC card readers, Samsung Pay also is compatible with the traditional card readers most merchants already have in place.

Even as usage grows, however, mobile payments remain a nascent trend, accounting for just 0.6 percent of all debit card transactions in the second quarter of 2018, Auriemma reported.

However, banks and credit unions remain optimistic that mobile wallet adoption will grow as merchants and their customers seek faster, smoother checkout experiences. "Roadmaps for 2019 are all about digital, friction removal and customer experience," Solaman said. "For many debit card issuers, mobile wallets are a key part of that strategy."


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