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Table of Contents

Lead Story

Self-service channel emerging

News

Industry Update

Industry afloat amid economic plunge

MasterCard rings in new year with fee hike

FACTA flags identity fraud

Comerica tapped for prepaid benefits

Features

SEPA: Will the promise be realized?

Tracy Kitten
ATMmarketplace.com

Sizing up merchant cash advance

Marc Abbey, Yuriy Kostenko and Myron Schwarcz
First Annapolis Consulting

Industry Leader

Holli Targan –
Lady of the law

Views

Interchange debate a wake-up call

Patti Murphy
The Takoma Group

Have passion, success will follow

Biff Matthews
CardWare International

Education

Street SmartsSM:
It's 'bons temps' with SEAA in New Orleans

Dee Karawadra
Impact PaySystem

Requirement 10: PCI's Everest

Michael Petitti
Trustwave

Landing pages: Convert interest to action

Nancy Drexler
SignaPay Ltd.

Acquiring compliance

David Mertz
Compliance Security Partners LLC

Merchant services hierarchy

Adam Atlas
Attorney at Law

Company Profile

Sonoma Technical Support Services

New Products

POS terminal cool to the touch

ST-A10 TouchPOS
Toshiba TEC America

Ensure health care claims at the POS

ImpactMD
Impact PaySystem

A quick-draw scanner at the POS

MS9590 VoyagerGS
Metrologic Instruments Inc.

Inspiration

Business travel made comfy

When the sandman is AWOL

Miscellaneous

POScript

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

January 28, 2008  •  Issue 08:01:02

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MasterCard rings in new year with fee hike

On Jan. 1, 2008, MasterCard Worldwide doubled its cross border assessment fee on acquirers, from 20 to 40 basis points on all card transactions that originate outside the United States, where the cardholder's country code differs from the merchant's country code.

Depending upon the currency used in the transaction, the fee is calculated by multiplying a cross border transaction dollar amount by a predetermined basis point rate, with one basis point equaling one-hundredth of 1%.

Since the fee's inception in April 2006, all cross border transactions initiated by MasterCard, Maestro and Cirrus-branded cards are subject to this fee.

The fee increase will now have an even bigger impact on U.S. merchants who process payments using non-U.S. bank members - as their merchant acquirers. Many ISOs and merchant level salespeople set up U.S. merchants through foreign banks.

In a tight market, acquirers are reluctant to pass this fee increase on to their merchants. Acquirers can recoup some of their costs by having their merchants implement dynamic currency conversion (DCC) technology at the POS.

DCC is a value added service that converts in real-time a card purchase in a merchant's local currency into the customer's home currency. The service allows customers to shop in their home currencies; merchants receive reporting and settlement in their home currencies.

When an acquirer offers DCC to a merchant, the merchant receives a portion of the margin earned on the cross currency transaction. The remaining balance is split between the acquirer/ISO and the DCC processor. This new revenue stream helps to compensate acquirers and their merchants for MasterCard's cross border fees.

DCC is offered by a number of processors, including Planet Payment Inc., E4X Inc., Pure Commerce Pty. Ltd., Fexco and others.

MasterCard charges issuers 80 basis points on each international transaction and now charges an additional 40 points to the acquiring banks on the same transaction.

Visa Inc. also charges a 1% exchange rate fee for cross border transactions, called the international service assessment, but only to the issuer. In 2005, Visa changed its policy that in certain regions, including the United States, the fee would be rebated to the acquirer if customers pay in their own currencies. This practice encourages issuers not to charge additional fees to their cardholders.

In MasterCard's quarterly report filed Oct. 31, 2007, the revenue generated from currency conversion and cross border fees jumped 43.4% in 2007 from the same period in 2006. In the first nine months of fiscal year 2007, MasterCard made $634 million, up from $442 million in 2006.

In an e-mail response to The Green Sheet, Chris Monteiro, Group Head of Worldwide Communications at MasterCard, said, "We don't comment on pricing. If and when our pricing has a material impact on our financials, we will disclose this impact in the ordinary course."

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | Harbortouch | USAePay | IRISCRM.COM | Humboldt Merchant Services