Samsung Pay: What Is It and Where Can I Use It?

Using near-field communication (NFC), a Galaxy smartphone (or even smartwatch) that supports Samsung Pay allows you to make quick and easy retail purchases. All without having to fumble around with your wallet or purse. When you launch the Samsung Pay app on your phone, you simply hold the phone above the credit card terminal and then tap-and-go.

Here’s what really puts Samsung Pay ahead of the competition. Existing card readers recognize Samsung Pay. For terminals that do not support NFC, Samsung Pay also works with MST (Magnetic Strip Technology), enabling consumers to make a contactless payment on a terminal even with the old school magnetic strip technology. The MST technology differentiates Samsung Pay from Apple Pay and Android Pay, both of which are only equipped to use NFC technology. While the other mobile wallet apps are limited to merchants who provide NFC technology, Samsung Pay can be used anywhere traditional credit and debit cards are accepted.

How to set up Samsung Pay:

Open the app on your phone
Scan your credit card
Use your fingerprint or PIN to secure the account along with an authorization code provided by the app
Once you’re ready to use Samsung Pay, swipe up from the bottom of the display
Swipe left or right to choose the card to use
Verify your fingerprint for the app or enter your PIN
Touch the back of your phone on the reader or hover your phone over the reader
Your phone will vibrate indicating payment

The following banks and services support Samsung Pay:

American Express
Mastercard
Visa
Bank of America
Chase
Citi
JP Morgan Chase
PNC
US Bank

Samsung Pay has expanded to the following countries and regions:

Australia
Belarus
Brazil
Canada
China
France
Hong Kong
India
Italy
Malaysia
Mexico
Puerto Rico
Russia
Singapore
South Korea
South Africa
Spain
Sweden
Switzerland
Taiwan
Thailand
United Arab Emirates
United States
Vietnam

Where Can I Use Apple Pay – 2019

Apple Pay allows Apple iPhone 6, 6s, 6, 7, 8, 6 Plus, 6s Plus, 7 Plus, 8 Plus, SE, X, XS, XS Max, XR, and Apple Watches to pay for good and services with a built in NFC chip. While not yet ubiquitous, Apple Pay is getting there. In the meantime, here is a list of the retail stores, apps (both retail and transit), colleges and universities, and nonprofits currently accepting Apple Pay:

You can use Apple Pay to pay for goods at the following stores with millions more:

ACE
Albertsons
Apple
Baskin Robbins
Best Buy
Chick-fil-A
Costco
Crate & Barrel
Disney Store
Duane Reade
Dunkin Donuts
Foot Locker
GAP
Crew
Jersey Mike’s
jetBlue
Levi’s
Macy’s McDonald’s
Nike
Office Depot/OfficeMax
Panera
Petsmart
Pizza Hut
Safeway
Sephora
7 Eleven
Staples
Starbucks
Subway
Target
Trader Joe’s
Walgreens
Walt Disney World
White Castle
Whole Foods

These apps and websites accept Apple Pay, along with many more:

Airbnb
B&H – photo, video, pro audio
Chipotle
Dunkin Donuts
Etsy
Fandango
Groupon
Grubhub
Hotel Tonight
Hotwire
Instacart
Jet
Lululemon
Lyft
MLB
Panera
Seamless
Sephora
Staples
Starbucks
StubHub
Target
Ticketmaster
Wish

Use Apple Pay when using these transit apps:

Caltrain San Francisco Peninsula and Santa Clara Valley
*CTA and Pace Chicago metropolitan area
MBTA Boston metropolitan area
Metrolink Los Angeles metropolitan area
MTA Metro-North and Long Island railroads New York metropolitan area
NJ TRANSIT New Jersey and New York metropolitan area
RTC Las Vegas metropolitan area
RTD Denver metropolitan area
*TriMet, C-TRAN, and Portland Streetcar Portland and Vancouver metropolitan area
Ventra (CTA, Pace, and Metra) Chicago metropolitan area

*Tap and pay via Apple Pay

The following colleges and universities accept Apple Pay:

The University of Alabama
Duke
Oklahoma University
Temple University
*Johns Hopkins University
*Santa Clara University

*Coming later this school year

Donate by way of Apple Pay to the following nonprofits, in addition to others:

American Red Cross
Children’s Miracle Network Hospitals
Chron’s & Colitis Foundation
Global Giving
RED
Jude Children’s Research Hospital
Save the Children
United Way
WNET New York Public Media
WWF

Naturally, these apps that come standard on an iPhone accept Apple Pay:

Apple Music
Apple News+
App Store
Books
iCloud
iTunes Store

If you’d like to learn more about how to use Apple and Google pay click the link here!

How to Choose the Best Merchant Services Agent Program

The world of merchant services is extremely exciting, yet it can be competitive. There are countless opportunities to make money in this industry, but throughout it all, you want to ensure that you are providing the best possible experience for your clients. Because of this, joining the best merchant services agent program is absolutely critical to finding success in this space.

In this article, you will find some of the key characteristics that you should search for when selecting a merchant services agent program. By keeping these characteristics in mind, you will increase the chances that you select the best possible merchant services ISO program.

Factors to Consider When Selecting the Best Merchant Services Agent Program

To select the best merchant services agent program, you will first want to find a program that offers stellar customer service. The worst-case scenario is hearing complaints from your clients and not being able to get in touch with your merchant services ISO program. Even if the problem at hand isn’t necessarily your fault, you will suffer the consequences if you can’t get a representative from your merchant services agent program on the phone. Before making your choice, therefore, you must ensure that your merchant services agent program has a dedicated staff that can quickly and accurately answer any questions that you may have. While it may not seem like a large issue now, ignoring this factor can put your client relationships at risk.

Next, search for a program that offers boarding options from large payment processing platforms. Having access to many of the largest payment processing platforms—like First Data and TSYS—provides you with some valuable peace of mind. It significantly minimizes the chances of your clients encountering any technological or integration issues. Instead of worrying about whether their point of sale or billing software will integrate with the platforms within your program, your client can spend more time focusing on growing their businesses. It’s a win-win for both you and your clients.

A terrific merchant services agent program also offers great cash discount opportunities. Cash discount programs allow merchants to offset their entire payment processing bill. In other words, they let merchants collect the entirety of their revenue while taking advantage of great payment processing tools. These programs work by automatically adding the cost of the transaction to that transaction, allowing merchants to skip payment processing fees. While you will want to read the fine print on these types of programs, they are a valuable added benefit that you can reference when pitching potential clients.

Finally, your merchant services agent program should be able to take on high-risk accounts. While the definition of “high-risk” may somewhat vary, high-risk accounts can include things like medical marijuana, travel agencies, non-US gaming, tobacco, and pharmacy accounts. Even though you may not be working on these accounts at the moment, having this optionality is extremely valuable as you search for additional clients. Instead of needing to find another merchant services agent program to accommodate these “high-risk” businesses, you can seamlessly work with these merchants to grow your business. This puts less stress on you as you are scaling your business.

Seizing the Opportunity

This is not an exclusive list, but we encourage you to look for the factors above when selecting your merchant services ISO program. When completing your research, we also recommend that you search for and read reviews. Doing so can help you confirm that a particular merchant services agent program provides real value for its agents.

Finally, while we may be biased, we believe that our merchant services agent program is second to none. At Host Merchant Services, we are proud of our terrific customer service and are confident that you will be happy with our white-glove service. We are proud to offer an extensive number of boarding partners. Some of our partners include TSYS and First Data, which are two of the largest payment processing platforms in the world. Finally, we offer cash discount programs and multiple high-risk bank partnerships, providing you with additional benefits and features that you can pitch to your clients.

To learn more about our independent sales agent program, click here. If you have any questions about our program, don’t hesitate to reach out.

American Express Announces E-Commerce Bank Transfer

Starting later this year, American Express is offering online shoppers a brand-new way to pay retailers directly from their bank account, in real-time, without the need to use a debit or credit card in hand.

The new service, which will be offered to bank account holders in the U.K., even those without an American Express card, is set to roll out in the fourth quarter.

Here’s how the new Pay with Bank Transfer option will work.

What Is an American Express E-Commerce Bank Transfer?

Whereas before consumers were required to enter card details, thanks to American Express, this could all soon be a thing of the past. The service offers customers the option to instead make their payment via an American Express bank transfer with real-time payments directly from their bank account, rather than via their debit card. Customers will also be able to view their bank balances prior to confirming the transaction, and, according to American Express, will be able to benefit from “bank level data security.”

To make use of the service, all customers will have to do is click on the “Pay with Bank Transfer” button upon checkout, and select their bank from which they wish to make the purchase. They will then be redirected to their bank’s website where they will sign in and authenticate themselves, and approve the payment details before continuing to finalize the purchase.

Thanks to a wider initiative known as open banking, the data that people have stored with multiple financial institutions can be collected together and shared with trusted third parties, simplifying procedures while maintaining high levels of security.

Do I Need to Be an American Express Cardholder?

Not at all. The bank transfer service is open to anyone, whether they are an American Express customer or not. All that is required of the customer is a U.K.-based bank account.

What are the Benefits of an American Express E-Commerce Bank Transfer?

Currently, bank transactions require having a physical card or card information to complete a transaction. With the Pay with Bank Transfer option, consumers have more options for paying retailers without sacrificing security.

Transactions are also much faster. The American Express service allows for instant transfers from customers to recipients, whereas paying with a credit or debit card would usually take a few days to a week to complete.

Where Can I Use the American Express E-Commerce Bank Transfer?

There will only be a handful of retailers utilizing the system at launch, however, a major rollout throughout 2020 will see the bank transfer system adopted by a wider range of online ecommerce retailers.

Some of those initially taking part in the American Express bank transfer scheme include JustGiving, Oak Furnitureland, Thai Airways, Richer Sounds, Hays Travel, and the Royal Lancaster London Hotel.

What Are Level 2 and Level 3 Data?

Credit card brands divide their fee structure into three groups: Level 1, Level 2, and Level 3. The higher the level, the lower the interchange fees for the merchant. While a majority of businesses may only qualify for Level 1 processing, which is the level appropriate for B2C, or business to consumer, transactions, some businesses are exclusively B2B, or business to business, merchants, which can take advantage of the Level 2 and Level 3 interchange fee discounts. In this article, you will learn the differences in the different levels of data and how to use level data to reduce your business interchange fees.

The More Data, the Higher the Level

Level 1 Data

The amount of data determines the level. The more data a merchant provides, the higher the level the transaction achieves. Level 1 is the most basic level requiring a minimal amount of data, namely the merchant name, the transaction amount, and the transaction date. As an example of Level 1 pricing, the Visa Commercial Card Present Level 1 fee is 2.50% + $0.10. If a majority of a merchant’s business is handled via consumer credit cards, that merchant only needs to provide Level 1 data.

Level 2 & Level 3 Data, B2B & B2G

Level 2 and Level 3 require significantly more data in exchange for a significant reduction in transaction fees. A merchant qualifies for Level 2 interchange fees if a majority of its business is B2B. If a merchant engages in mostly B2B or B2G, business to government, transactions, they can take advantage of the Level 3 interchange rates.

Credit card brands use these discounts to incentivize businesses to allow credit cards for use in major transactions, versus other forms of payment. Thus, the credit card brands require a minimum amount for the transaction. Or they offer a tiered discount, increasing in proportion to the size of the transaction.

Level 2 transactions require the following data in addition to all Level 1 data:

Tax ID
Merchant minority code
Merchant state code
Merchant ZIP code
Sales tax amount
Customer reference number

In exchange for this level 2 credit card processing data, credit card brands reduce the interchange rate by roughly 0.50% for the transaction.

Level 3 data includes the following in addition to both Level 1 and Level 2 data:

Invoice Number
Order Number
Ship-From Zip Code
Destination Zip Code
Freight Amount
Duty Amount
Item Extended Amount
Item Product Code
Item Commodity Code
Item Description
Item Quantity
Item Unit of Measure

In exchange for this level 3 credit card processing data, credit card brands reduce the interchange rate by up to 1.00% for the transaction.

Services that Support Merchants

Standard credit card processing terminals do not have the capacity for either inputting the data or forwarding the data to the credit card service. While Level 2 data is easy to enter, a separate credit card terminal or software can automatically populate the Level 2 data. Only certain gateways can process Level 3 data. Merchant credit card processing services can support merchants in handling Level 2 and Level 3 data through gateways and separate credit card processing terminals. Merchant support services also help businesses configure their information before sending Level 2 and Level 3 data to the payment provider.

ACLU Makes the Case Against Cashless Stores

The American Civil Liberties Union, or ACLU, has been defending individual rights and freedoms guaranteed by the Constitution, as well as by the laws of the United States of America for close to 100 years. Most recently, the ACLU turned its focus to cashless stores.

Reasons ACLU Says No to Cashless

Consistent with the ACLU’s campaign to install privacy protections in the digital age, the civil liberties nonprofit addresses the anonymity of cash, but they also recognize the impact a cashless society would have on low-income, homeless, and undocumented people. In addition, the ACLU points out that a cashless trend negatively impacts small merchants who avoid credit card processing fees by doing a cash-only business or who offer cash discounts. Not to mention, the ACLU points out that cash always works while technology often lets us down, from technology failures to privacy and security breaches.

Cashless Bans Across the Country

The ACLU’s robust statement is in response to the cashless trend, most notably Amazon’s backpedaling on only offering cashless and cashier-less convenience stores. In response to criticism, both Amazon and Sweetgreen, a salad chain, reversed their decisions to implement a cashless business. Beyond public sentiment, actual legislation outlawed cashless stores starting in 1978 when Massachusetts banned the practice. Current backlash moved New Jersey, as well as San Francisco and Philadelphia to do the same.

Private Matter

Cash prevents anyone from knowing anything about your purchases. With the convenience of credit cards comes the potential of the credit card company not only obtaining but leveraging data about you and your purchase. Cash does have its limits, specifically the limit of $10,000, which is the starting amount one must report to the government as a cash transaction.

Fully Banked

Both low-income populations and large percentages of people of color are not “fully banked,” meaning they do not have a checking or savings account, barring them from the cashless society. Specifically, the ACLU points out, 6.5% of U.S. households have no checking or savings account while only 52% of Black people and 63% of Latino people have bank accounts. Plus, more than 18% of U.S. households have a bank account but still need to check cashing and payday loans.

Cash Discount Merchant Services

Businesses can avoid backlash while simultaneously embracing cash-paying customers by adopting cash discount merchant services. With this model, merchants can offset service fees while avoiding an increase in prices by enrolling in a cash discount program. Unlike surcharging, which charges customers an extra fee for paying with a credit card, businesses can instead add a service fee to all customers while applying a discount equivalent to this service fee when customers pay by cash or check. This platform incentivizes the use of cash.

Businesses should carefully consider whether or not their customers would not appreciate a service fee added to their bill. Service-based industries, including auto shops, landscapers, and electricians are well-suited for the service fee. Ultimately, the business owner will know best if a cash discount will work for their business.

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.