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B2B Payment Processing Solutions and Interchange Rates

B2B, or business to business, describes a transaction in which the customer is another business rather than of an individual. Whether it’s goods, services, or both, B2B payments include transactions such as purchasing supplies to do business, buying lunch for employees, or paying for travel expenses. Though the payment methods for B2B transactions are often the same as for B2C (business to consumer), credit card and checks – there are differences that need to be taken into consideration. Often times businesses use “business credit cards” which have a high interchange fee compared to consumer credit cards. In this article, you will learn about “Level 1, 2, and 3 data” – a way to lower interchange fees substantially for B2B transactions.

Transition to B2B Credit Card Purchases

Businesses are increasingly moving away from invoices and checks to pay for business to business goods and services and moving toward using a business credit card to separate business expenses from personal expenses.

When setting up business to business credit card purchases, merchants can qualify for lower B2B interchange rates when processing business credit cards. By leveraging lower interchange rates for B2B credit card processing, businesses can save potentially hundreds if not thousands of dollars.

The Cost of Doing Business – Without Data

Without taking advantage of lower interchange rates, B2B credit card processing is expensive to process. The worst rate is 3.26% + $0.10 (the MasterCard rate with no AVS data). The lower rates require a business to jump through some hoops, also known as levels, in order to qualify for these lower rates. These hoops are data. The more data a business provides via a transaction, the smaller the interchange fee for that transaction.

Level 1, 2, and 3 Data – The Higher the Level, the Lower the Fees

Level 1 Data

The basic level, Level 1, is a transaction providing the least amount of data to the credit card brands. All transactions are required to reach Level 1 whether they are B2B or B2C. Merchants must provide the merchant name, purchase amount, date, and billing zip code. This level offers only a small reduction in interchange rates.

Level 2 Data

In order to reach Level 2 interchange rates, a business must provide Level 1 data, as well as other data including sales tax amount, tax indicator, and other details of the transaction. While Visa and Mastercard have different requirements for this level, Discover doesn’t offer lower rates for Level 2 or Level 3. And American Express supports Level 1 and Level 2 while it does not support Level 3.

Level 3 Data

Level 3 requires all of the data from Levels 1 and 2 plus other data such as item commodity code, SKU description, product code, and even more data points involving the transaction. Not only do the credit card brands vary in their interchange rates depending on the Level, but they also can change these rates. Thus, a merchant must be vigilant in checking the requirements.

Lower Interchange Fees for Businesses

Merchant credit card processing services can help businesses get the lowest rates possible by properly classifying the business’s MCC code, which can reduce interchange rates, by helping a business properly process large sales, over $6,500, which also can reduce interchange rates, and by providing a business software or terminals specifically for B2B sales equipped with the Level 2 and Level 3 information, which reduces interchange rates. While B2C transactions might focus on the markup, merchants want to look at the total cost for B2B transactions.

Companies Ask Congress For Data Protection Law

Dozens of CEOs from companies like IBM and Amazon has sent an open letter to Senate and House leaders asking for comprehensive data protection laws. The letters claim state consumer privacy laws simply aren’t enough as they vary widely, lead to confusion, and threaten the competitiveness of the United States. The companies claim a federal law would create a more stable policy environment that allows companies to create products within precise and predictable boundaries.

The letter was sent on behalf of Business Roundtable, an association of CEOs of some of the largest companies in the United States. The CEOs of Walmart, State Farm, Salesforce, Qualcomm, IBM, AT&T, Visa, Mastercard, JP Morgan Chase, and Amazon are among those who have signed the letter.

The group blames a rising number of different state privacy regulations as a leading reason for complicated consumer privacy in the country. This patchwork of regulations has also increased complications for companies that must comply with laws across various jurisdictions and states.

E-commerce Data Protection One of the most comprehensive forms of privacy protection passed at the state level is the California Consumer Protection Act (CCPA), a landmark privacy law that will go into effect in 2020. Beginning in 2020, Americans will have the right to demand a company disclose what personal data they have collected about the consumer and ask the company to delete the information or not share it with third parties. Companies will also need to be more upfront in telling consumers what data they collect.

While CCPA is a state law that technically only applies in California, it also covers any out-of-state merchant who sells to California or displays a website in the state. That means that any merchant will have a strong interest in complying with CCPA rather than leaving the fifth largest economy in the world.

With a single federal law for privacy and data protection that would supersede state laws, product design, data management, and compliance would be simplified.

However, some privacy advocates argue the tech companies are more interested in protecting their own interests as combining privacy regulations under a federal umbrella would allow lobby groups to water down meaningful protections. With too much protection, companies may have trouble selling certain types of consumer data to online advertisers, a large and growing area of business.

US Congress Meeting Data Protection Act The Business Roundtable released its own consumer privacy framework it wants Congress to consider as the basis for a future privacy law. Their proposal includes many provisions of the General Data Protection Regulation (GDPR) of the European Union in more broad terms.

In February, the US Government Accountability Office (GAO), a government auditing agency, gave Congress permission for passing a national data privacy law to improve consumer protections much like the GDPR. GAO also recommended placing the FTC in charge of enforcing future privacy law in the United States.

By June, reports surfaced that lawmakers had reached a roadblock attempting to create a national privacy law. Senators could not agree on how strict rules should be or on the key items of the bill.

And one last thing to consider if you are a merchant and you are worried about data breaches affecting your bottom line: Host Merchant Services Data Breach Security Program. Click that link to download a PDF explaining the value-added service HMS provides its merchants that goes above and beyond just simple PCI Compliance and helps ensure a merchant’s peace of mind.

FAQ About Companies Ask Congress For Data Protection Law

Why are companies asking Congress for a data protection law?

Companies are requesting a data protection law from Congress to establish a unified framework for handling personal data in the United States. The absence of a comprehensive federal law has led to a patchwork of state-level regulations, creating compliance complexities for businesses operating across multiple jurisdictions. u003cbru003eu003cbru003eCompanies recognize the need for clear guidelines and standardized practices to protect consumer data, enhance cybersecurity, and build trust with their customers. A federal data protection law would provide a consistent set of rules and requirements, ensuring companies can navigate the regulatory landscape more effectively while safeguarding individuals’ privacy rights.

What are the benefits of a federal data protection law?

A federal data protection law offers several advantages. Firstly, it provides a clear and consistent regulatory framework for businesses to follow, reducing ambiguity and compliance burdens. It establishes baseline standards for data privacy, security, and breach notification, enhancing consumer protection. u003cbru003eu003cbru003eA unified law simplifies compliance for companies operating nationally, minimizing the costs associated with meeting varying state-level requirements. It also fosters trust between businesses and consumers, as individuals can have greater confidence that their personal information is being handled responsibly. Additionally, a federal law enables improved cross-border data transfers, facilitating international business operations and promoting economic growth.

What are the challenges to passing a federal data protection law?

Several challenges hinder the passage of a federal data protection law. First and foremost is the complexity of crafting legislation that balances the interests of businesses, consumers, and government agencies. Finding consensus on issues such as defining personal data, determining appropriate consent mechanisms, and establishing penalties for non-compliance can be challenging.u003cbru003eu003cbru003ePolitical divisions and differing priorities among lawmakers also contribute to delays. Additionally, lobbying efforts from various industries may influence the content and scope of the law, potentially diluting its effectiveness. Striking a balance between protecting privacy rights and enabling innovation is a delicate task, requiring careful negotiation and compromise among stakeholders.

What the Looming SCA Deadline Means for Merchants

With the Second Payment Services Directive (PSD2) now live, the European Union’s Strong Customer Authentication (SCA) regulation is now set to go into effect this month. The regulation, which aims to improve transaction security for customers and retailers, is set to bring a lot of confusion as merchants brace for the change.

What Is SCA?

Strong Customer Authentication is part of the PSD2 regulations that require greater security for many transactions using 2 of 3 forms of customer authentication. PSD2 went live in January 2018 with implications for all European companies that deal with payments. While PSD2 includes 11 mandates, one of the biggest implications is improving the security of e-commerce payments by increasing customer authentication.

Some transactions are exempt from SCA requirements including:

Trusted beneficiaries. Consumers can choose to add businesses they trust to a list of beneficiaries held by their issuing bank.
Recurring transactions involving subscription billing as long as SCA rules are applied to the first transaction or if the payment amount changes.
Low-value transactions of less than €30.

Merchant Responsibilities Under SCA

Under the new guidelines, a merchant must provide card issuers with two authentication factors from customers for the transaction to be completed. The guidelines lay out three authentication factors:

Inherence, such as a fingerprint or other biometric
Possession, such as a credit card or device
Knowledge, such as a PIN or password

Soon, millions of consumers will need to confirm they are who they say they are during e-commerce transactions by responding to communication over a mobile device, providing personally identifiable information, or using a fingerprint or facial scan.

Are Merchants Ready for the Change?

SCA is required to be built into an online merchant’s checkout flow by September 14, 2019, although research shows most e-commerce retailers are nowhere near ready. A Mastercard survey found just 25% of online retailers were even aware of the impending SCA regulations and, of these retailers, 24% had no plans to support the new requirements by the approaching deadline.

Retailers who are not equipped for the Strong Customer Authentication requirements will soon see declines on European-based transactions if they are not exempt from the regulations or they do not have 3D-Secure authentication to securely verify card-not-present (CNP) transactions.

According to one estimate from Stripe, European businesses may lose up to $57 billion within the year of SCA requirements going into effect. The same study found just 40% of businesses that were aware of the Strong Customer Authentication guidelines were ready to meet the requirements.

Which Retailers Are Affected by SCA?

European merchants aren’t directly responsible for meeting the requirements of SCA as this falls on the issuers and acquirers within the European Economic Area (EEA). This includes the 28 members of the EU plus Liechtenstein, Iceland, and Norway. However, retailers who do not adhere to the guidelines will likely see an impact on authorization rates for card-not-present transactions.

SCA is only required for transactions in which the issuer and acquirer are in the EEA. Retailers who contract with an acquirer that is located in the EEA, for example, will be impacted with declines on transactions processed on cards issued in the EEA when SCA guidelines are not met.

Regulated and Unregulated Debit: What You Need to Know

Following the financial crisis of 2008 Congress won the ability to regulate swipe fees, or debit interchange fees, charged to retailers by Visa and Mastercard, as well as charged by the issuing financial institutions. This is all made possible under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, more specifically the Durbin Amendment. The Durbin Amendment places banks in two categories: an exempt bank (regulated) has assets equal to or more than $10 billion and an non-exempt bank (non-regulated) has assets less than $10 billion. This status affects the fee charged to merchants by the bank that issued the debit card.

What Is Regulated Debit?

For regulated debit, which involves the consumer’s debit or prepaid card issued by a bank with more than $10 billion in assets, transactions are capped at $.21 plus 0.05% as per the Durbin amendment for both card-present and card-not-present transactions. There is an additional $0.01 charge available for entry into the card network fraud program for qualifying banks.

Although this cap has decreased the fees that most acquiring banks make from debit cards, banks have raised their minimum fees to the maximum allowable by the Durbin Amendment, essentially eliminating the small ticket discount rate to compensate for the lost revenue, causing an increase in fees for merchants who sell less than $10 per ticket.

What Is Unregulated Debit?

Unregulated debit, which are debit cards issued by banks with less than $10 billion in assets, have variable interchange fees depending on the merchant category code, the size of the transaction, as well as other factors such as whether the card is present or not. While some debit networks cap the maximum fee paid by businesses, other networks have no cap on credit card processing. Large interest groups, trade organizations as an example, can negotiate caps with networks.

Durbin Amendment Consequences

While the Durbin Amendment cut swipe fees nearly in half for larger merchants and merchants who sell big-ticket items, the amendment increases costs for businesses that sell small-ticket items. Rather than paying smaller fees on smaller purchases and larger fees on larger purchases, as was the case before the Durbin Amendment, merchants now pay the maximum amount for smaller transactions.

How Merchant Service Providers Can Help

A merchant services provider like HMS can help your business find different avenues for saving money based on the size of the business, the types of cards the business accepts, and whether the business uses CP or CNP processing.

By comparing interchange rates, merchants will discover exempt cards have varying interchange fees. By comparing signature and PIN networks, merchants can find the lowest interchange fee. Once the merchant has established the best arrangement for their business, then they can determine whether to process large national bank cards as a signature debit transaction, or to process small local bank cards as debit with the lowest exempt rates.

Host Merchant Services can help your business understand the difference between signature debit transactions where a customer uses a debit card without entering a PIN, and PIN debit transactions where a customer uses a debit card by entering a PIN, helping you save money in processing fees.

What 5G Will Mean For Mobile Payments

The expected global rollout of 5G technology is predicted to bring many changes to today’s connected global economy. With real-time, high-speed data flow, 5G is likely to fuel even further expansion of mobile payments and change the credit card processing industry on a fundamental level. Here’s what 5G may mean for the future of mobile payment technology.

What Is 5G?

A major technology shift is occurring that will bring a big update to the wireless technology that delivers data to cell phones. 5G refers to the fifth-generation cellular network which will be a big step ahead of today’s wireless technology, 4G, by offering incredibly fast mobile internet speeds that will allow users to download movies within seconds. That’s about 20 times faster than the 4G experience. 5G technology won’t just bring faster speeds; it will also reduce latency or lag which happens when signals pass between different carrier switching centers.

In addition to cell phones, the technology will also impact security systems, drones, and even vehicles. To get the full benefits of 5G, once the rollout is complete, users will need a compatible new phone and cell phone carriers will need to upgrade to new transmission equipment.

How Will 5G Technology Change Credit Card Processing?

The payment processing industry is expecting a big shakeup when 5G technology is finally rolled out. With dramatically faster speeds and reduced latency, 5G can:

Streamline transaction processes
Increase transaction speeds
Improve the accuracy of fraud prevention
Support a more user-friendly experience

5G technology can revolutionize the mobile shopping experience. For example, it makes it easier to support virtual reality shopping to allow consumers to see what an item will look like in their home before buying or go through every step of buying a car — including the credit check, receiving personalized financing options, and funds availability — with mobile technology.

Increased speeds won’t just improve customer experience; speed also supports better fraud prevention. Fast data transmission allows banks to quickly verify data like geolocation and merchant ID to avoid errors. These factors can increase consumer confidence in digital payment technology to potentially sway more people to change how they pay.

All of these benefits may support increased adoption of mobile payments, especially in the United States which is far behind China and other areas of the world in terms of adopting mobile payment technology.

While China boasts a mobile payment usage rate of more than 80%, the adoption rate in the U.S. is less than 10%. In the United States, debit and credit cards are much more widely accepted than in other regions of the world, offering an alternative to paying without cash.

To accept a mobile payment, merchants need the right hardware which are tailor-made for mobile businesses. By improving security and transaction speeds while opening the door to more advanced mobile payment options, 5G may just help increase the adoption rate of mobile payment technology in the U.S.

Hy-Vee Data Breach

In the middle of August 2019, convenience store and supermarket giant Hy-Vee reported a data breach incident involving its point of sale systems. Few details about the breach were initially given; however, it took about a week for cyber security researchers to take a closer look at the situation and provide more information on the matter. Before discussing some of the known details about the breach, it should be noted that it does not directly involve credit card processing insofar as clearing payments; it is isolated to point of sale equipment and its supporting data network.

Hy-Vee is a major brand in the American Midwest; the company operates convenience stores, supermarkets, snack bars, and gas stations from South Dakota to Missouri plus six other states. As can be expected from a merchant of this magnitude, many locations handle payments through a shared point of sale (POS) network. What is known thus far about the incident is that hackers targeted the POS and credit card reader terminals at the company’s gas stations, cafes, Market Grille restaurants and Wahlburger fast-food eateries. The POS and credit card processing systems at Hy-Vee supermarkets and convenience stores were not affected because they operate on a separate network.

According to an investigation by Brian Krebs, a respected information security researcher, the Hy-Vee breach resulted in the theft of about five million credit and debit card numbers from customers in 35 states as well as from a few countries in Europe and the Middle East. Unfortunately, these records found their way to underground cybercrime markets where they are being sold for malicious purposes. The specific market mentioned by Krebs is known as Joker’s Stash, and the name of the data dump is “Solar Energy;” the sellers are asking between $17 and $35 per record.

Since Hy-Vee is still investigating the breach, individual cardholders who may have been affected have not been notified; moreover, the locations and the specific times when the transactions were compromised have not been revealed. Another aspect of the investigation that has not been mentioned is related to the breach mechanism, but the Krebs report hinted that the POS network may have been infected with malware that intercepted data stored in the magnetic stripe of the cards. POS equipment at Hy-Vee supermarkets, convenience shops, and drugstores feature point-to-point encryption, but this does not seem to be the case in the POS equipment installed at the affected Hy-Vee gas stations, cafes and restaurants.

While the Hy-Vee data breach can result in credit and debit card cloning, the company does not think that identity theft is something that shoppers should worry about because of the type of information stolen. Nonetheless, two lessons that merchants can learn from this case include: point-to-point encryption is always preferred for POS equipment, and cybercrime insurance policies are more important than ever. It is too early to tell if the burden of liability should fall on Hy-Vee or on the vendor managing the POS network, but this is something that merchants should think about. When credit and debit card transactions are encrypted from the reader to the terminal, data breaches are significantly mitigated. Should a POS or payments processor fail to protect transactions accordingly, a good insurance policy can shield merchants from legal complaints that may arise from a data breach.

Visa Continues To Support Mobile Gun Purchases

As the debate in the United States rages on over gun laws, some companies have been taking sides by choosing to take action. Visa, however, is one company that has refused to wade into the political fray. Instead, it has opted to continue along doing business as it has been in regards to mobile payments.

An announcement from the company came in early August that it would not block mobile payments for gun purchases. Visa Chairman and CEO Alfred Kelly made the announcement after back-to-back mass shootings in Texas and Ohio thrust issues surrounding guns back into the news. It is not a change of course for the company; instead, it was merely a confirmation that things will not be changing in regards to gun purchases.

The company’s stance regarding mobile payments for gun purchases is a different one than some of its competition has taken. PayPal and Square have opted to not allow their services to be used for such purchases.

The rationale expressed by Visa CEO Alfred Kelly as to why the company will continue to support mobile gun purchases essentially comes down to it being simply a matter of not dictating morality to the company’s customers. It is legal for people to buy guns in the United States; therefore, the company will continue to process those purchases- just as it does other things that are legal but may be considered controversial by some.

That is not to say, however, that Alfred Kelly does not hold views regarding gun legislation in the United States. In an interview with CNBC, he expressed an interest in seeing lawmakers do more in regards to gun laws. However, no matter his personal views, he is not currently interested in applying them to the company that he heads up.

The company is not alone in this view, either, in regards to not dictating morality to its customers. Mastercard has also taken a similar stance. Its CEO Ajay Banga expressed similar sentiments as those of Alfred Kelly- refusing to determine what is right or wrong. As far as he is concerned, if it is legal to own an item his company will help customers purchase it.

Meanwhile, CEOs at other companies have taken a less neutral stance regarding guns. Apple CEO Tim Cook is one notable example of this. After the shootings in El Paso and Dayton, he took to Twitter demanding action.

Visa Pushes for Mobile Payments at 2020 Olympics

The Japanese government and Visa have teamed up in an effort to bring mobile payments to the 2020 Olympics in Tokyo.

The payment giant is preparing new payment experiences for visitors, athletes, and citizens attending the 2020 Olympics, an effort that will support the “Cashless Japan” campaign that is designed to boost mobile payments to 40% by 2045 from today’s 20%.

Visa is currently working to increase acceptance of digital payments with merchants ahead of the Summer Games, especially in quick-service restaurants and convenience stores, while connecting athletes with the concept. Mobile payments technology will be featured at the Olympic Village, Olympic venues, and throughout Japan in an effort to improve the experience for fans.

In a press release, the payment network stated that Japan is a unique opportunity with “the world’s third-largest economy” with commerce that “remains predominantly cash-based.”

About one-fifth of payments in Japan are digital compared with 60% in the United States, 70% in China, and 90% in South Korea, which has one of the highest adoption rates in the world.

The payment technology sponsor for the Olympics is also planning unique innovations for the Summer Games, including wearable technology, new mobile applications that use digital cards, and biometric payment authentication.This isn’t the first time the payment giant has worked to improve digital payment acceptance for the Olympics. In 2016 at the Rio Olympic Games, payment-enabled rings were provided to athletes. These rings used NFC technology and microchips made by Gemalto. The rings were water-resistant and did not need batteries or charging. Nearly 4,000 NFC-enabled point-of-sale terminals were implemented for the wearables and also to boost mobile payment acceptance at important Olympic venues in the city.

The Japanese government and payment network hope that improving access to digital payment technology will give the typical Japanese person more reason to use digital payments in the future.

Japan has been slowly moving toward the global cashless trend for the last few years. Japan has made the “Cashless Japan” effort such a priority to reduce the need for manpower at retail stores as the country faces a declining and aging population and labor shortage.

The government has another incentive for boosting digital payment technology: shifting away from cash improves transaction transparency and makes it easier and more efficient to collect taxes. In 1997 after a financial crisis, South Korea was able to successfully push forward cashless transactions to boost its economy and control taxes by offering a tax deduction for credit card purchases, among other incentives.

In Japan, however, cash has remained king thanks to a low crime rate that allows citizens to feel safe carrying even large amounts of cash, readily available ATMs, and high trust in cash.

Major Upcoming E-commerce Trends [2023 Update]

Payment Methods – Credit Card Processing & Beyond

Making the shopping experience easier for the consumer is the goal of new e-commerce tools. Every year, the e-commerce industry is dynamically transforming, moving in the direction of personalization and new sleeker customer experiences, especially with the increasing integration of AI. Streamlining payment processes and providing multiple avenues of payment are only part of a merchant’s strategy in making paying for products online as easy as possible.

PWA = Progressive Web App

With mobile conversions on the rise – a whopping 55% increase in mobile sales for 2018, eCommerce is shifting. By 2022, it’s predicted retail sales via smartphone will reach $175.4bn. With this shift, retailers are dropping mobile apps for PWA entirely. PWA, or progressive web app, leverages web capabilities to deliver an app-like experience to consumer. Indexed by search engines, URL-accessible, PWA’s are deployed to servers, making the user experience more robust and dynamic.

W3C = World Wide Web Consortium

The W3C, or World Wide Web Consortium – the international community working to ensure the long-term growth of the Web, is aiming to simplify online payments for the sake of decentralization. Allowing browser native UIs to use previously saved data such as an address and card information to make web payments is the ambition of the W3C. “Web Payments” is the name of the standard and will enable consumers to tap a few times versus filling out the same information on every new site.

Multi-Currency

Rather than paying conversion rate fees, consumers now can choose multiple currency options on sites like Shopify. Instead of restrictions via a retailer’s local currency, consumers can use the currency they are accustomed to. Multi-currency options are gradually being rolled out.

Voice-Command Currency

With over 20% of search queries made via voice command, e-commerce has a huge opportunity for growth in the order-by-voice future. By 2020, experts predict 50% of searches will be done by voice command and so on. Retailers should start focusing on long-tail keywords and structured product data now to accommodate the future.

B2B = Business to Business

80% of B2B organizations accept orders and payment through their website, according to a BigCommerce survey of 500 such businesses. This data not only indicates the growth of e-commerce payments in B2B industries but also demonstrates the complexity of a B2B e-commerce channel, which also accepts payments via quote, ACH, terms, check, and PO.

Influencers – The Social Media Swipe Up

E-commerce businesses also need to embrace social media influencers and the “swipe to buy” revolution. Not only do e-commerce merchants need to be available by mobile, they need to be available by social – social media that is. If an influencer markets a merchant’s goods and services while marketing their personalities, that merchant better make it easy for consumers to tap to purchase. Social media influencers can make a brand. They shape the future of the social media industry, as well as the social media presence of the products and services.

Modern E-commerce is the next revolution in the American economy. Exponentially growing and innovating, e-commerce will not wait for merchants who can’t or won’t keep up. Being accessible on mobile devices is only the start for merchants. Catering to the smartphone consumer in a myriad of ways is the only path to success for the modern entrepreneur.

modern e-commerce social media influencers

Visa Introduces APIs for Merchants to Facilitate Installment Payment Plans

Installment payments are currently being used with great success in other countries but it has yet to become prevalent in the U.S. Based on some recent news from Visa, that might soon be changing.

The latest from Visa

In June, Visa revealed its intention to enter the POS installment payment business. By using APIs, this would allow businesses that accept Visa credit card payments through merchant services to offer installment plans to their customers.

An installment plan is set for a certain duration, during which customers make payments in equal amounts on a schedule, until the payment total equals the purchase price. For example, the classic as seen on tv ads used to say “three easy payments of $19.99” – that was an installment payment structure.

These installment options will be offered by Visa Next, a new website that is expected to become a source of innovative and exciting payment solutions. This particular product will be available in January 2020.

What this means for merchants and consumers

Businesses that use merchant services to facilitate credit card payments will be able to take advantage of this new opportunity. But how will this benefit them? Good question.

Giving consumers payment options is always good for business. These installment payment plans are likely to accomplish that because they make it easy and quick to set up the plan. However, this isn’t the case right now. Our standard method, right now, for offering consumers a payment plan involves the consumer getting a loan for the amount of the purchase through a third party lender, and paying it off through them.

Here’s how it normally goes:

Consumers are given installment options.
They must sign up with a certain provider.
Consumers must complete the application process.
They may or may not get accepted.
If accepted, they can apply their funds to the purchase.
This must be repeated for each different merchant.

With Visa using APIs for installment payments, none of that will be necessary. Customers will simply be given the opportunity to choose a payment plan using an account they already have.

This will be more convenient for customers, making it easier for them to set up a payment plan, which could increase sales for businesses that offer these plans.