Tag Archives: MasterCard

FANF Reminder [2023 Update]

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Today The Official Merchant Services Blog wants to review the details of VISA’s new Fixed Acquirer Network Fee (FANF). On April 1, 2012, Visa began charging this new fee. But it has taken about this long for it to catch up to merchants and their statements. The process sort of knocked its way down like dominoes falling — The fees went in effect in April, but were based on May’s activity, so didn’t show up until June’s statements, that many merchants are now noticing here in July.

These fees are new, and start to show up on statements where they hadn’t appeared before and they have the appearance of being hidden fees. This development goes against the Host Merchant Services policy of no hidden fees. Which is why we’ve attacked this story so vigorously in our blog, trying to keep our readership up to date on these new card association fees affecting the credit card processing industry.

The HMS Guarantee

Host Merchant Services wants to assure its customers that it sticks by its guarantee. HMS will never increase their fees for their customers. HMS continues to offer the guaranteed lowest rate. And that rate is frozen. Unfortunately, Card Association Fees are new, and are not part of any current pricing model. They are also mandated and initiated by the credit card companies themselves — Visa, MasterCard and Discover. All processors everywhere will be adding them to their pricing structure. So your statement will start showing new fees moving forward. But we here at Host Merchant Services will help explain what they are, where they come from and why they’re just now appearing on your statement. So please feel free to contact us if you have any questions about your statement.

Now About Those Fees

FANF is the most high profile of the new fees. But it’s name is a bit misapplied, as the fee itself is not “fixed” in any sense of the word.  The FANF is a monthly fee that will affect all merchants to a varying degree. For card present businesses like retailers, the amount of the Fixed Acquirer Network Fee will be based on the number of locations a business has. For card not present businesses like e-commerce operations, the FANF will be based on gross Visa processing volume. So the “Fixed” fee’s actual amount varies based on multiple factors. Those variables are:

  • Merchant Category Code (MCC)


    The merchant category code used to classify a business plays a role in the amount of the FANF charged each month. However, the impact of the MCC is very minimal, amounting to a difference of $0.90 – $1.10 for most businesses (less than fifty locations).

  • Acceptance Method


    The main factor in determining the amount of the FANF is whether a business processes the majority of its transactions in a card present or card not present environment.

  • Card Present Businesses

     (Excluding Fast Food Restaurants / MCC 5814)
    The amount of the Fixed Acquirer Network Fee for card present businesses will be based number of locations. Businesses with one location will be charged $2 – $2.90 a month, up to $85 a month for businesses with 4,000 or more locations.

  • Card-Not-Present Businesses

     (As well as Fast Food Restaurants / MCC 5814)
    For card-not-present businesses, the amount of the FANF will be based on gross Visa processing volume. Card-not-present businesses will see a greater impact from the FANF than card-present businesses due to the fee being determined by volume.

For example: card-not-present business processing between $8,000 and $39,999 will be hit with a Fixed Acquirer Network Fee of $15 a month opposed to just $2 for a card present business with similar volume and one location.

Other Fees

Besides FANF, Visa also is implementing a Transaction Integrity Fee and making revisions to its Network Acquirer Processing Fee. Visa’s Transaction Integrity Fee is a new $0.10 fee that will apply to U.S. domestic regulated and non-regulated purchase transactions made with a Visa Debit card or Visa Prepaid card that fail or do not request Custom Payment Service (CPS) qualification. On the other hand, the Network Acquirer Processing Fee on Visa-branded signature debit will be reduced — going from $0.0195 per authorization to $0.0155 per authorization. The fee for credit card authorization will remain $0.0195 per authorization.

Global Reveals More About Data Breach [2023 Update]

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Today The Official Merchant Services Blog is updating its coverage of the Global Payments Data Breach. The big bomb Global just dropped is that apparently there was a second data breach.

The story, initially broken by Ellen Messmer at Network World stated that Global Payments itself revealed this latest news.

Data Breach II: Credit Card Boogaloo

From the Global Payments Website:  “The Company’s ongoing investigation recently revealed potential unauthorized access to servers containing personal information collected from a subset of merchant applicants.  It is unclear whether the intruders looked at or took any personal information from the Company’s systems; however, the Company will notify potentially-affected individuals in the coming days with helpful information and make available credit monitoring and identity protection insurance at no cost.  The notifications are unrelated to cardholder data and pertain to individuals associated with a subset of the Company’s U.S. merchant applicants.”

So What Was Compromised?

This second breach compromised the personal information of a subset small merchants that applied to be clients of Global Payments — and the company stressed that this set of merchants was different than the ones exposed in the first breach. The exposed information includes the sort of personal information the Atlanta processor uses as part of its underwriting process. The company stressed that it does not have evidence that any fraudsters obtained or misused the merchant applicants’ information — but the servers that contained that information were possibly accessed by an unauthorized party. Last time we updated this story, we provided information from Brian Krebs about how information from the first data breach could have been used by fraudsters.

Something to keep in mind regarding Global’s claims that the second breach did not lead to fraud is that Global still maintains that the information that was compromised in its first breach was not involved in fraud — even after Krebs dug up examples of fraud happening to Global customers in his blog entry here.

Wait, What?

The author of the official updated statement released by Global — Jane Elliot from Investor Relations — added this caveat to the statement: “This announcement may contain certain forward-looking statements within the meaning of the ‘safe-harbor’ provisions of the Private Securities Litigation Reform Act of 1995.  Statements that are not historical facts, including management’s expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties.  Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: further results of the continuing investigation of the unauthorized access of our processing system, including the discovery of additional card data or information implicated in the incident; the effect of our remediation efforts on operations; the impact of fines or penalties from the card networks and state authorities on our results of operations; and other risks detailed in the company’s SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable.  The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.”

That reads like a very wordy hedge against the way this story has evolved to date. To put it another way, much of what Global has already stated, including clinging to the claim that the breach is contained and the number of compromised cards was just 1.5 million, has already been contradicted by information revealed by Visa and MasterCard.

Visa and MasterCard issued new alerts on May 15 suggesting the breach dated back to January 2011 — an exposure window significantly longer than what was originally reported by Global when news of the breach surfaced in late March. Visa’s alerts in March, which Brian Krebs used to break the story,  indicated the breach occurred sometime between Jan. 21, 2012, and Feb. 25, 2012. Global used those alerts to help underscore their assertion that the breach was small and contained. But on April 26, an updated advisory from Visa put the suspected intrusion date closer to June 7, 2011. Setting the length of exposure for compromised cards back six months. And then Visa and MasterCard released information that pushed the date back an entire year from the initial alert, to January 30, 2011. This vaults the figure of compromised cards to 7 million — much higher than the 1.5 million “or less” suggested by Global in their official statement.

All this contradiction over the length and severity of the breach had  been met with silence from Global Payments. They had offered no further comment other than to link to their website. But with this latest batch of statements, they’re now adding that very long caveat. And they apparently intend to clear matters up even further in June. The Company plans to provide additional information regarding the potential financial impact, the PCI compliance process and the status of the investigation not later than its July 26, 2012 year-end earnings call according to Paul R. Garcia, chairman and CEO of Global Payments.

The Official Merchant Services Blog will be following this story as close as ever now. It’s getting more complicated and convoluted. Hopefully that earnings call will clear the air a bit. But it still seems like the reporters digging into this, as well as Visa and MasterCard have a very different set of facts than the ones Global is sharing with people.

Mastercard Credit Card 19100982

MasterCard Site Tools

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Today The Official Merchant Services Blog takes a close look today at card association juggernaut and industry titan MasterCard. A card association is a network of issuing banks and acquiring banks that process payment cards of a specific brand, and along with Visa, MasterCard is one of the big wigs in the industry — Card associations Visa and MasterCard each comprise over 20,000 card issuing banks.. They help set the standard for the payment processing industry. Other payment card association brands include Discover, Diner’s Club, American Express and JCB. Among United States consumers alone, over 600,000,000 payment cards are in circulation. Visa, MasterCard and American Express issuers co-brand with the individual card association, for example, “WellsFargo-Visa” or “Citi-MasterCard.”

Making Moves

It was reported here in our May 4, 2012 Blog Entry, that MasterCard was gaining ground in the Swipe Debit sector of revenue, potentially crowding in on Visa’s dominance.  Speculation suggested that the hard cap on Debit Card Swipe fees imposed by the Durbin Amendment from October 2011 may have helped MasterCard take some of that market share away from Visa.

MasterCard has been winning deals to handle processing of debit transactions according to the company’s Chief Financial Officer Martina Hund-Mejean. Bloomberg quotes Hund Mejean as saying in a conference call to analysts: “In every quarter we’re going after business very surgically and opportunistically. You can see those results in our numbers.”

And according to Tien-tsin Huang, a JP Morgan Chase & Co. analyst in a May 1 research note, Bank of America Corp. — the biggest debit-card issuer and catalyst of post-Durbin media frenzy — switched to MasterCard.

Mastercard Credit Card 19100982

Collaboration on Chip Cards

On May 21, MasterCard proposed the formation of a cross-industry group to foster collaboration and alignment between networks, issuers, merchants, acquirers, processors, terminal manufacturers, card manufacturers and other groups for the implementation of EMV technology in the United States. This proposal comes from MasterCard’s January Roadmap for the transition to EMV, something the entire credit card industry is moving toward including Visa and which we discussed in our February 7, 2012 Blog Entry. MasterCard emphasized this need for a payments ecosystem to be fully aligned across the board, citing the upcoming implementation of EMV standards in the U.S. as the catalyst for that need.

You can read more about MasterCard’s take on EMV at their Website Here.

MasterCard’s Web Site Tools

Speaking of their Website … MasterCard has a very useful resource available to its visitors.

It’s Demos Page, FOUND HERE, has a flash demo that goes through the anatomy of a credit card. This helps people understand the process of using them for payments by breaking the entire item down visually. As it says in the demo, a card is more than just a piece of plastic.

Here’s a screenshot of the demo in action:

 


CLICK HERE to view it.

More interesting to us in the Merchant Services industry, is the next demo, the anatomy of a transaction demo. It’s a flash graphic that walks you through, step by step, a transaction. It gives you an nice journey through each step your payment takes from the moment of purchase.

Here’s a screenshot of the demo in action:


CLICK HERE to view it.

The demo page is a useful resource for any readers at all interested in how payment processing or credit cards work and should at least be thought of as an addition to one’s “favorites” tab.

Industry Terms: Interchange

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Interchange

Interchange is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”).

In a credit card or debit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, usually smaller fee for the acquiring bank or ISO, which is often referred to as a discount rate, an add-on rate, or passthru.

For cash withdrawal transactions at ATMs, however, the fees are paid by the card-issuing bank to the acquiring bank (for the maintenance of the machine).

These fees are set by the credit card networks, and are the largest component of the various fees that most merchants pay for the privilege of accepting credit cards. Visa, Mastercard, and Discover are each known as card associations. And each card association has their own rate sheets known as Interchange Reimbursement Fees. These fees make up the majority of what you pay to your processor and they vary greatly depending on the card type accepted.

Download Visa’s Interchange Fees Here

Merchant Services Document Download Graphic

Download MasterCard’s Interchange Fees Here

Merchant Services Document Download Graphic

 

Interchange Plus Pricing

Interchange Plus pricing means that the acquirer charges you a variable MSC consisting of the cost price plus a fixed markup. Interchange Plus Pricing  is exclusively how we quote at Host Merchant Services. Interchange Plus, also known as Cost Plus, pricing gives the customer a fixed rate over published Interchange Fees. This pricing format is normally quoted as a discount rate (percentage fee) along with a per item or authorization fee. The great thing about Interchange Plus pricing is that you always know exactly what you are paying to your processor to services your account. Think of Interchange, and all the associated fees, as an unavoidable cost. No matter who you process with, you have to pay these fees. They may be labeled differently, or wrapped up in a confusing pricing tier, but one way or the other, you are paying Interchange fees. By understanding the markup you pay over Interchange, you know exactly what you pay to your processor and exactly what is going to the card associations. That allows you to make a decision on whether or not the markup seems reasonable for the service you get and choose your processing partner accordingly.

Here’s a small graphic explaining the basics of how Interchange Plus works:

Host Merchant Services infographic on Interchange Plus pricing

Visa’s Ups and Downs

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The Official Merchant Services Blog takes a look at Visa’s wild ride between May 2 and May 3. In the midst of a very active first quarter of 2012, Visa’s earnings report came in. The San Francisco based credit card giant then took a ride on a roller coaster in the span of two days after the report was released.

The Up Vote

The company had good news to report on May 2: Visa said Wednesday that its profit for the first three months of the year was up 30 percent from the year before, primarily because credit card use rose in the United States and overseas. Bloomberg broke down some key statistics from the report in their story here: “The company said Americans rang up 12 percent more on their charge cards for the quarter. Debit card use grew by only 4 percent to $284 million, however, the slowest growth in a year.”

So the boost in Visa profits is tied to an increase in the use of credit cards in the first three months of the year. But it appears the Durbin Amendment, financial reform legislation designed to address problems with swipe debit fees, has slowed down debit card use. As the Bloomberg article reports, the Durbin Amendment appears to be having an impact on profits: “Banks have eliminated some debit card rewards programs since October, when the government limited the fees banks can charge stores for card transactions.”

The profit breakdown for the quarter paints a very rosy picture. Visa’s net income was $1.3 billion, or $1.60 per share. Wall Street was expecting $1.51. Revenue rose 15 percent to $2.6 billion. Wall Street was expecting $2.48 billion.

The Down Turn

And then the roller coaster ride took a dip. Bloomberg reported the next day, May 3, that Visa stock took a decline based on the details of a U.S. Antitrust Probe into Visa’s Debit Strategy. The article states: “Visa Inc., the payments network that has lost market share amid new debit-card rules, slid as much as 4.5 percent in extended trading after disclosing a U.S. antitrust probe into the firm’s pricing and strategy.”

Visa adjusted the network’s fee structure to defend its leading market share after the Durbin Amendment took effect in October. On March 13, the U.S. Justice Department’s antitrust division issued a civil investigative demand asking for information about Visa’s debit strategy. Bloomberg quotes Visa Chief Executive Officer Joseph W. Saunders as saying in a conference call: “We are confident our actions are appropriate and that our response to the DOJ supports that.”

According to Saunders Visa has received four other requests for information from the Justice Department since 2007, and all have been resolved with Visa’s full cooperation.

The Durbin Factor

The Visa news comes after recent announcement from MasterCard, which stated that their own first-quarter profit increased 21 percent to $682 million. Like Visa, MasterCard’s profits also beat Wall Street estimates.

Speculation suggests that the hard cap on Debit Card Swipe fees imposed by the Durbin Amendment from October 2011 may have helped MasterCard take some market share away from Visa. MasterCard has been winning deals to handle processing of debit transactions according to the company’s Chief Financial Officer Martina Hund-Mejean.

Bloomberg quotes Hund Mejean as saying in a conference call to analysts: “In every quarter we’re going after business very surgically and opportunistically. You can see those results in our numbers.”

And according to Tien-tsin Huang, a JP Morgan Chase & Co. analyst in a May 1 research note, Bank of America Corp. — the biggest debit-card issuer and catalyst of post-Durbin media frenzy — switched to MasterCard.

Visa’s Fees Bite Back

Visa changed its debit-card fees in April, creating new fees like the Fixed Acquirer Network Fee (FANF) in an attempt to create incentives for merchants to route more transactions on the company’s network. The fees, which had been variable were broken into various components. To read more about those fees, you can CLICK HERE to see Host Merchant Services‘ own coverage of the April fees. The Bloomberg article suggests that Bank of America switched to MasterCard in reaction to the new Visa fees and MasterCard’s own surgical strike against Visa’s market share.

Hand Inserting Credit Card To A Pos Terminal Payment Terminal Flat Design Vector 64931018

A is for Acquirer

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We’ve been working hard the past 7 months at The Official Merchant Services Blog to offer our readers a knowledge base — a place to come frequently to get clear and useful information about the payment processing industry. But we’re always looking to take things a step further. We want to offer more information and be even more helpful. I was recently inspired by this article over at UniBul’s Credit Card Blog which offers a definition of 21 confusing payment processing terms. Credit Card Processing has a lot of buzzwords that get used. This type of technical or industry language can sometimes make understanding statements very difficult for merchants.

Well we want to make these terms clear and remove the confusion. This is part of the ongoing service Host Merchant Services promises: the company delivers personal service and clarity. So we’re going to take some time to explain how everything works. This is going to be an ongoing series where we define industry related terms and slowly build up a knowledge base. We’ll start with the same term that kicked off the UniBul blog. But our coverage is going to go a bit deeper than just a definition. We’ll provide a little extra context. And as we get more and more of these completed, we’ll collect them in our resource archive for quick and easy access.

Hand Inserting Credit Card To A Pos Terminal Payment Terminal Flat Design Vector 64931018

Acquirer

An acquiring bank (or acquirer) is the bank or financial institution that processes credit and or debit card payments for products or services for a merchant. The term acquirer indicates that the financial institution accepts or acquires credit card transactions from the card-issuing banks within an association. The best known (credit) card Associations are Visa, MasterCard, American Express, Discover, Diners Club, JCB and China UnionPay.

An acquirer is contacted to authorize a credit card or debit purchase. The acquirer will either approve or decline the debit or credit card purchase amount. If approved the acquirer will then settle the transaction by placing the funds into the seller’s account.

Every time you use your credit or debit card you are using the services of an acquirer. An Acquirer will charge a monthly and/or a per transaction fee to the stores or merchants to facilitate transactions. Acquirers need to be licensed with credit card companies, such as Visa or MasterCard.

To get a better understanding of how payment processing works, you can view this infographic.

Visa, MasterCard Add New Fees

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The Official Merchant Services Blog has just learned that Visa and MasterCard are planning to add new processing fees in the coming months — fees specifically targeted toward Debit Card Swipe transactions. These new fees, which we are consolidating and dubbing as “Card Association Fees” are going to complicate the pricing process for Merchant Services Providers in 2012.

Tricky Fees

Visa, MasterCard and Discover are the main players in the “card associations” and they are the driving force behind interchange and interchange rates. These associations periodically review and modify their interchange rate structures and billing strategies. What this means is that normally each year the big credit card companies get together and increase interchange rates. But after the Durbin Amendment went into effect in 2011, the credit card associations are taking pause and tweaking their own strategy. So effective April 2012 there are new Card Association Fees being implemented and these fees are not interchange fees. These are brand new processing fees created by the associations.

Visa’s New Fees

Visa has announced that beginning April 1, 2012, it will be introducing a trio of new fees:

  • A Transaction Integrity Fee
  • Revisions to its Network Acquirer Processing Fee
  • A Fixed Acquirer Network Fee (FANF)

Transaction Integrity Fee: Visa’s Transaction Integrity Fee is a new $0.10 fee that will apply to U.S. domestic regulated and non-regulated purchase transactions made with a Visa Debit card or Visa Prepaid card that fail or do not request Custom Payment Service (CPS) qualification. The CPS rates are Visa’s best rates and apply to both regulated and non-regulated transactions. This new fee can be viewed as a definite response from Visa to the Durbin Amendment’s interchange rate cap and finance reform/regulatory changes.  This is part of the ninja-style set of moves The Official Merchant Services Blog has cited would be the reaction to the Durbin Amendment.

Network Acquirer Processing Fee: The Network Acquirer Processing Fee on Visa-branded signature debit will be reduced — going from $0.0195 per authorization to $0.0155 per authorization. The fee for credit card authorization will remain $0.0195 per authorization.

Fixed Acquirer Network Fee: FANF will apply to the acceptance of all Visa-branded products and is based on both the size and the number of merchant locations. The FANF fee will be based on volume reported in July 2012. Visa will require U.S. acquirers to provide new merchant location reporting for the tracking of this fee. The new reporting requirements will include a monthly breakdown of acquired merchants, number of merchant locations, and merchant sales volume by merchant Taxpayer ID. For Card Present merchants, with the exception of Fast Food Restaurants, a merchant Taxpayer ID with physical locations will be assessed FANF on a per-location rate basis. For example, Card Present Merchants with one to three locations will see a pass through per location per month fee of $2. Price per location per month will increase according to the number of locations – upwards of $65 month for merchants exceeding 4000 locations. Card Present High Volume MCC Merchants with one to three locations will see a pass through per location per month fee of $2.90. Price per location per month will increase according to location — upwards of $85 month for merchants exceeding 4000 locations. Customer Not Present, merchant aggregators and merchants primarily operating as Fast Food Restaurants (MCC 5814) will be assessed based on gross merchant sales volume originating from any Visa-branded card. Merchants that fall into this category with monthly gross sales volume ranging from less than $50 a month on the low end will see a $2 a month fee- to merchants with gross sales exceeding $400 million at a $40,000 a month fee. There are some 18 tiers, with a merchant falling into a volume tier of $8,000 to $39,999 a month seeing a new $15 per month FANF fee.

Visa will also effectively waive the FANF for eligible Charitable and Social Service Organizations (MCC 8398). The FANF waiver for Charitable and Social Service Organizations will be provided through a quarterly rebate process that Visa has indicated will be defined at a later date.

Continue Reading – Visa, MasterCard Add New Fees, Part 2 

1 Step Forward, 2 Steps Back [2023 Update]

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We’ve been covering Mobile Payments here at The Official Merchant Services Blog since the very beginning. In fact, the Article Archive at Host Merchant Services has extensive coverage of the topic as well. It’s just too sexy a topic — everybody loves the allure of gadgets — and too fascinating a financial prediction — folks in the know are predicting Mobile Payments to boom in the billions between now and 2015-ish — to not continually cover Mobile Payments.

But I keep picturing a scene from the 1992 women’s sports movie A League of Their Own in my head every single time I look at the state of Mobile Payments in the U.S. The scene that resonates with me is the one where Marla Hooch — fearsome and uniquely striking power hitter for the team — is about to step into the batter’s box. But she’s getting confused. She steps into the box. Then back out of the box. The reason for her confusion? She’s getting contradictory signals from her Manager and her teammate. One wants her to swing away and unleash the fearsome potential of her staggering offense. The other wants her to play it safe and move the runner over for a better chance to score an efficient run. So there she goes, Marla Hooch, the powerhouse of the league. One foot in the box. Then out of the box. It’s the exact problem Mobile Payments currently faces. The power and potential of what it can do for commerce keeps getting highlighted in story after story, research after research. And then the biggest obstacle it faces keeps getting thrust in front of its face: Security.

Step Out of the Box

Google Wallet, one of the biggest lynchpins in the mobile payment industry’s bid to effectively take hold in the U.S. market was recently plagued by a security problem. This article from ExtremeTech notes the issues that happened to Google and its mobile payment system in a piece that discusses the pitfalls of its beta testing. A pair of bugs forced Google to shut down its pre-paid cards and Google Wallet took a huge hit on the nose in the press. This reinforced the public’s view that mobile payments are a bit scary because people think that their personal information — account numbers, social security information, credit card numbers — will get swiped from them out of thin air. The thought process being that if all they have to do to pay for an item is wave their phone in the air at a cash register, some sneaky net ninja can pluck the data right out of the very same air.

The article sums up the problem: “In the last week, there have been not one, but two exploits that could give a malicious individual access to your Google Wallet mobile payment app on Android. While the first is a root-only hack that Google couldn’t really be expected to plan for, the second affects all Android users and is simple to do.”

It goes on to suggest these bugs popped up due to a core problem with how google beta tests things.

Since that story broke, Google has gone on the offensive, and is now stating that the bugs are fixed. As this cnet article says: “Google has patched a hole in Google Wallet that could’ve allowed someone to access a user’s funds simply by resetting the PIN and using a prepaid card. The company said yesterday it has issued a fix that now prevents a prepaid card from being re-provisioned to another person. It has also restored the ability to issue new prepaid cards following a move on Monday to disable the use of such cards.”

These bugs were a major setback for more than just Google. The Mobile Payments landscape is bubbling with interest but it’s also saturated with variety. There are multiple avenues businesses are considering for their entry point into what research firms like Gartner predict will be big money very very soon. One of those avenues is Near Field Communication (NFC).  The underlying technology of NFC is described as: “Near field communication (NFC) is a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few centimetres. Present and anticipated applications include contactless transactions, data exchange, and simplified setup of more complex communications such as Wi-Fi. Communication is also possible between an NFC device and an unpowered NFC chip, called a “tag”.” 

This is the technology that Google tagged to be their entry into Mobile Payments. And so these bugs are a major hit for Google and NFC as a whole, taking one of the most hyped aspects of Mobile Payments down a peg in the industry.

Step Into the Box

In the midst of NFC taking it on the chin, Visa and MasterCard unleashed its EMV initiative — as The Official Merchant Services Blog reported on February 7. This is, in my mind, the Mobile Payments Marla Hooch being told to step into the batter’s box and knock it out of the park. Visa is invested heavily into Mobile Payments, and is prepared to drag the industry kicking and screaming into the future of profits that are being predicted for Mobile Payments. The EMV initiative hinges on chip technology being attached to cards, and for Mobile Payment evolution also being attached to smart phones. What Visa’s investment in this avenue brings is added security. This is huge. The security advantage addresses the biggest fear people have for mobile payments. Visa, much like Tom Hanks, wants Marla Hooch to get in there and swing away.

Going Sci-Fi

This article from Asia One adds another wrinkle into payment processing, and possibly the future of mobile payments: Biometrics. The article cites The Monetary Association of Singapore (MAS) as researching ways to make Debit card transactions more secure. And one of the avenues of research has been biometrics. This could really lead to a breakthrough in the march towards a cashless society, including the use of smartphones for mobile payments. Having biometric security measures on your phone would work in tandem with the chip technology that Visa is pushing, making both the unit you use to store the information — your phone — attuned to your own physiology; and the transmission of your transactions — the swipe of said phone in the air — attuned to a secure chip. Identity thieves and card fraud masters would be stymied on multiple ends and have to work very hard to stay ahead of that security curve in their mission to steal your information and then your money.

The Bottom Line

So What’s Marla Hooch going to do? It looks like Google is sticking with its plan and dedication to NFC. They sort of have to due to how invested they are into the technology already. And it’s no secret that Visa is very much tied into the future of mobile payments, chip card technology, and payment processing security. Both entities are full steam ahead. And with that much tech and finance industry strength behind the initiatives, Mobile Payments will get its chance to swing for the fences. We look for the Google Bugs to blow over and not really hinder Mobile Payments growth much at all in 2012.

For more information on Mobile Payments you can read from Host Merchant Services:

The Official Merchant Services Blog will continue to keep you up to date on the latest advances in Mobile Payments technology.

Partial Payments Reminder

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Today The Official Merchant Services Blog is going to step off its SOPA soap box and return to a much more focused and specific topic — Partial Payment Authorization.

In November, 2011 Partial Payment Authorization was mandated by MasterCard and Discover. This mandate requires merchants to support partial payments on their terminals. Host Merchant Services reported on this mandate and you can read about it here in our Article Archive.

Pay Attention To The Purchase

We’re bringing this back up because there has been some confusion lately among merchants about this particular issue and this mandate. What keeps happening is that merchants are not noticing when the partial payment pops up on their terminal. This is a problem because of the way these payments function. If you do not notice that it is a partial payment and do not obtain the rest of the payment from the customer, they can walk out of your store with their purchase and you lose money.

So you need to really pay attention to the purchase. It will show up on your terminal screen. It will also show up on the receipt. Here is an example of what a receipt will look like:

Host Merchant Services Sample Receipt for Partial Authorization

In cases where only a partial authorization is returned, the merchant will need to collect another form of payment for the difference. In the instance where the cardholder does not have another form or payment to pay the difference or wants to use a different form of payment for the full amount, a real time partial authorization reversal must be performed in order to free up the funds that were previously held up by the authorization.

Host Merchant Services offers step-by-step guides on how to perform these real time partial authorization reversals.

You can download them here in our Resources Section.

Which Businesses Are Affected?

The other area of confusion that seems to be cropping up with Partial Authorization is which businesses are affected by this mandate. Not all businesses are currently required to use Partial Authorization. However, there is a long list of businesses that are, and this list includes the most popular merchant codes. Here is the list:

To Recap

So just to review, Partial Payment Authorization is mandated by MasterCard and Discover. The listed businesses above are absolutely required to utilize it. It is easy to lose track of when these occur if you do not pay attention to the receipt or to your terminal when running the transaction through. The most common mistake is someone processing the transaction is in a rush and the receipt looks very similar to a normal, approved, full transaction when run through. Terminals do not have a sound or warning that this type of partial payment happened. So time and attention to detail are required for these payments moving forward. When a partial authorization happens you need to have your customer offer an alternate payment for the remainder of the transaction or you need to reverse the transaction right then and there.

For More Information

Host Merchant Services is available to walk any interested merchants through this process. You can contact us and we will be glad to explain how partial authorization works. Or you can take advantage of the materials we offer on this very website. To get more information regarding Partial Payment Authorization, you can: