The Green Sheet Online Edition
November 12, 2012 • Issue 12:11:01
Latest interchange rates
Do you know if the new Visa interchange rates for fall 2012 have been released yet? Usually these rate tables are released by the card associations (MasterCard and Visa) in April and October, but I haven't seen anything from them or The Green Sheet (or elsewhere for that matter) that indicates Visa's table was released. Do you have any idea when it may be released, and will The Green Sheet notify its readers when it is?
Thank you for your question. When Visa Inc. and Mastercard Worldwide became companies instead of associations of banks, they began posting interchange rate charts on their respective websites. Prior to that, The Green Sheet published interchange rates, but since they are public knowledge now, we no longer do that. However, we do discuss interchange and other fees (such as Visa's Fixed Acquirer Network Fee) in our editorial coverage.
Visa's latest rates are from June 2012; MasterCard's are from October. Visa stated in the introduction to its chart, titled Visa U.S.A. Interchange Reimbursement Fees, that these are "transfer fees between financial institutions" and that merchants "do not pay interchange reimbursement fees; merchants pay 'merchant discount' to their financial institution." Visa stated this "is an important distinction, because merchants buy a variety of processing services from financial institutions; all these services may be included in their merchant discount rate, which is typically a percentage rate per transaction."
Given the recent regulation of debit interchange, Visa may have decided to emphasize that merchants do not technically pay interchange fees. The rates in Visa's document are, however, the same interchange rates payment professionals use when calculating what a merchant's discount rate should be.
Here are the links to the latest rates:
Benefits, costs of registration
While I have found a few related articles in the archives of The Green Sheet, I am trying to come up with a good answer to a couple of questions. First, how much of a financial benefit would be gained by becoming an ISO or member service provider (MSP) for an office bringing on somewhere between 50 to 100 new accounts each month who is currently on average getting a 55 to 60 percent split? This would be weighing the annual cost of registration.
Second, are the ISO and MSP offices that we see out there who show that they are registered with multiple merchant banks paying the Visa/ MasterCard registration fee per merchant bank that they have an agreement with or do they pay that just the once per year?
Also, most of these ISOs and MSPs seem to have one application that they are using. How are they doing that while working with multiple merchant banks? Do those banks just all accept their one form of application, or is there some other method happening in the background that we do not see?
Benjamin C. Tolman
Advantage Merchant Services
We referred your questions to Andy Meadows, Vice President of Sales for SignaPay Ltd. He is also a member of The Green Sheet Advisory Board. Here's what he had to say:
It's tough to quantify the financial benefit, per se, of registering with Visa and MasterCard. It's more about having the ability to brand and market your organization as its own unique entity. Obviously, there are inherent benefits to creating your own brand in the marketplace. As well, when approaching a processor for your ISO partnership, registration may be necessary to obtain a wholesale relationship (versus a retail relationship) where the revenue share is higher and the cost structure is lower.
Yes, registration fees must be paid to each sponsor bank that an ISO registers with.
Generally speaking, an ISO will lead with one application that drives their merchant accounts through a specific sponsor bank relationship. If, for any reason, the ISO needs to board the merchant through a different sponsor bank relationship, the ISO would then need to execute a separate merchant application. All sponsor banks have their own unique merchant applications, and they will not accept a merchant application from a different sponsor bank relationship.
Thank you for your questions Benjamin, and thank you, Andy, for providing these helpful answers.
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