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This Story Will Affect You! |
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D The
previous rule generally stated that Visa allows bankcard processing up to
100% of weekly Tier 1 capital for all merchant activity, and 25% of
monthly Tier 1 capital for high-risk merchant activity (defined as MCC
5692, 5966, and 5967). The change to this rule may affect you because Visa
has limited all acquirers (effective 3/1/01) to 20% of their bank’s Tier
1 capital on a weekly basis. Additionally, no more than 15% of the
business can come from “high-risk merchant activity” which is now
defined as MCC: 3000-3299
Air Travel 4511
Airlines not listed within 3000 4121
Taxicabs and Limousines 4722
Travel Agencies and Tour Operators 4816
Computer Network/ Information
Service 5961
Mail Order Houses 5962
Direct Marketing: Travel - Related
Arrangement Services 5963
Door-to-Door Sales 5964-5969 Direct Marketing 7298
Health and Beauty Spas 7372
Computer Programming, Data Processing, and Integrated Systems Design Services 7997
Membership Clubs, Country Clubs, and Private Golf
Courses In
response to the rule change, Tim Jochner of Innovative Merchant Services
and Ken Musante and Jamie Savant of Humboldt Bank have formed a committee
called B.A.R.C. (Bankcard Association Rules Committee) made up of ISOs and
acquirers. The committee has already conducted several conference call
meetings, sent correspondence to all FDR advisory members, and is looking
for more members with similar concerns prior to their tentative meeting
with Visa on March 23. B.A.R.C.
reports that the general consensus of Visa is that to comply, the
recognized banks would need to obtain more capital, sign as an agent with
a larger bank, or discontinue business with part of their merchant
portfolio. The new rule only seems to pertain to smaller community banks
and none of the above options are reasonable to them; it may not be cost
effective for these banks to raise capital, and if they sign as an agent
they will give up the majority of income while retaining contractual
liability for any losses. Additionally, closing accounts means the loss of
revenue for these banks and their ISOs. B.A.R.C. feels the rule change
unfairly benefits larger banks because 1) these banks are not affected by
the rule and 2) the rule results in less competition for larger banks. B.A.R.C.
members stress that in order to get anything changed at Visa, banks and
ISOs must get involved and must encourage the support of other banks and
ISOs. The group has established goals, the largest of which is changing
the “High Risk Acquirer” rules. Other goals include attracting more
members and establishing an acquiring member on Visa’s board. B.A.R.C.
members agree that there is a definite regulatory concern and the rules
appear to be a clear violation of antitrust laws. Despite this concern,
the group wants to not pursue legal action as a first step, although the makings of a class
action suit seem to be there should B.A.R.C.’s efforts fail. Members
of B.A.R.C. include:
If
you would like to attend the next conference call meeting, and be present
for the presentation to Visa, contact Ken Musante at KenM@Humboldtbank.com
or (707) 269-3200. Note:
The domain names IBARC.com and IBARC.org have been registered but there
are no plans yet for a Web site. B.A.R.C. is also presenting their
concerns to the ETA Board. They wish to become a part of the ETA—perhaps
an adjunct committee. They do not wish to compete with the ETA but rather
use their membership and support for a common concern.
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