Visa recently announced several new fees impacting merchant credit card processing costs. Starting October 1, 2009, Visa will start assessing a 'misuse' fee for authorizations that are not either settled or reversed within certain timeframes. Visa will apply the announced fee of $0.045 to authorizations that are not followed by a matching clearing transaction (or in the case of a cancelled or timed out authorization, not properly reversed).
In the past, merchants frequently performed a $1.00 authorization only (without settlement) for verification and to retreive address verification (AVS) and CVV match or mismatch information. Visa explains that they're trying to reduce ghost authorizations because they restrict a cardholders ability to buy and increases declines.
Here is what merchants will need to do in order to comply with the new processing guideline and avoid the misuse fee. Card present authorizations must be reversed within 24 hours that have been submitted in error and/or cardholder cancelled. For card not present transactions, full or partial authorization reversals must be processed within 72 hours. Settlement must occur within 10 days of authorization for all merchants except Travel and Entertainment segments, which must clear within 20 days of authorization regardless of transaction date.
An alternative method to verify cardholder data, Visa has introduced Account Verification which will allow for a Zero Dollar Value authorization request and can include AVS and CVV data. MasterCard has as similar verification process for card not present recurring billing merchants with a $1.00 'test transaction'. Visa is charging for this service. This Visa Zero Floor Limit Fee (clearing without authorization) is applied for any clearing transaction submitted that cannot be matched to previously approved or partially-approved authorization transactions.
The Card Associations have announced these two new regulations in merchant card acceptance, detailed below:
Zero Floor Limit Fee
Effective August 1, 2009, Visa will apply a penalty per transaction to a clearing transaction that cannot be matched to a previously approved or partially approved authorization. Meaning, settlement may not occur without a prior authorization. The penalty per transaction is $0.10, passed to the merchant and billed in arrears in the following months billing cycle.
Example: If the penalty occurs in Aug, merchant will receive a $0.10 fee in their Sept billing cycle.
Effective Oct 1, 2009, Visa will apply a penalty per transaction to approved and partially approved authorizations that cannot be matched to a clearing transaction or authorization reversal within 10 days from the initial auth. Meaning, if settlement is not requested within 10 days of the original authorization, the per transaction penalty will apply. The penalty per transaction is $0.05, passed to the merchant and billed in arrears in the following month billing cycle.
Example: If the penalty occurs in Oct, merchant will receive a $0.05 fee in their Nov billing cycle.
Other Visa Credit Card Processing fees implemented in 2009:
- Visa Acquires Processing Fee (APF) - Visa is rolling out a fee of $0.0195 on all Visa branded authorizations acquired in the US regardless of where the issuer/cardholder is located. This fee will be effective July 1, 2009. This follows a MasterCard Network Access and Brand Usage Fee (NABU) of $.0185 for all U.S. issued transactions settled with MasterCard, announced in April 2009.
- International Service Assessment Fee - Effective April 4, 2009 Visa implemented the International Service Assessment (ISA) fee of 0.40% (40 basis points) on all international (non U.S. card) transactions processed by a U.S. merchant. This fee is similar to MasterCard's existing U.S. Cross Border Assessment Fee which is 0.30%.
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