Visa Transaction Integrity Fee a shot at the Durbin Amendment?
What is the transaction integrity fee or TIF is a very common question for business owners that accept credit cards and many are accusing Visa of testing the Durbin Amendment. Yes it is true Visa and MasterCard have introduced a new fee. It is called the transaction integrity fee and was introduced in April 2012. So is this just another scheme on the behalf of the major card brands and card issuing banks to suck profits out of your business? Is Visa trying to find a loop hole to the Durbin Amendment? And can you avoid paying this fee?
First lets look at what the transaction integrity fee is.
The TIF is separate from the interchange credit card rates and many feel that it is Visa’s way of finding a way around the now famous Durbin Amendment. The transaction integrity fee appears, however, to be intended to encourage merchants to maintain the highest level of “integrity” for every transaction protecting consumers and the business owner alike rather than a shot at the Durbin Amendment Effective April 13, 2012, Visa began charging a Transaction Integrity Fee of $0.10 on transactions involving Visa debit and prepaid cards that do not meet CPS requirements. CPS is a short for Custom Payment Services and refers to a qualification for a wide range of Visa interchange fees to represent the lowest credit card rates for any given category. Every time your business accepts a credit or debit card transaction that individual transaction must meet the Custom Payment Services guidelines to qualify for the lowest possible Interchange category. Should the transaction not meet the specified criteria then the fee is subject to Electronic Interchange Reimbursement Fee or EIRF for credit card transactions and now the TIF for debit and pre paid credit card transactions. EIRF is a transaction interchange rate downgrade from the lowest qualified interchange rate to a much more expensive category.
So how do you make sure that you accept credit cards and meet the CPS or Custom Payment Services requirements? The good news is that the TIF will have little impact on most standard business types that accept debit cards with the Visa logo. First off the transaction integrity fee only applies to the Visa debit and pre paid cards issued in the US. The TIF also only applies to transactions that are actually settled and does not applied to authorizations with no settlement.
To ensure that your transactions meet the CPS standards for card present transactions you must:
1. Always Settle or Batch out your transactions within 24 hours.
2. Always read and transmit complete magnetic strip data. If you frequently have to hand enter transactions because your card reader is not functioning properly then try cleaning your card reader or consult with your processor as it may be time to upgrade your credit card terminal
3. Always authorize and settle for the same dollar amount (unless your Merchant Category Code MCC allows for tips like restaurants and limo services).
To ensure that your transactions meet the CPS standards to accept credit cards for card NOT present transactions like e-commerce or mail order accounts you mu
1. Exact AVS or Address Verification System information.
2. An Order Number and Customer Service Number
3. Purchase date is to equal the shipping date and be within 7 days of authorization
4. Transactions must be settled with in 24 hours
5. The appropriate MOTO/ECI Indicator
6. Lodging merchants should include the check-in/check-out dates and folio number.
The TIF does not appear to have a widespread effect on most business types who accept credit cards and by taking a few simple steps you can make sure that your business is not effected. If you are seeing a impact from this new fee your credit card processor representative should be able to assist you in complying with the CPS guidelines. If you need further assistance your merchant services account contact the Merchant Doctor who will quickly set up a merchant account to accept credit cards with the industries lowest possible rates and friendly service. For more information on the Durbin Amendment check out our HUB.