Interchange Compliance - Guidelines

Rules. It seems like we have more rules in our lives every day doesn’t it? I am writing this post to make you aware of some more rules. These rules are for merchant accounts and if you don’t follow them you will you will be fined! Well maybe not fined but you will end up paying more for your merchant account.

It would be real nice if these rules were posted for all merchants to see and then follow. However, that is not the case. Finding what these rules are, even in this age of the internet, is extremely hard to do. That is where I come in. I may not be an interchange compliance expert but I do know the key rules that apply to most of my clients.

Let’s look at how this system of rules (guidelines) work. Here are a few examples:

Example one: You own a book store and you have 34 transactions in one day, all swiped and face to face. You have a new point of sale (POS) system that unbeknown to you was not set up to auto batch at night. The result? Your authorized transactions just sit there, they don’t batch and no money is deposited into your bank account. Best of all of the Visa transactions that do not settle with in 24 hours will be downgraded to a card category named EIRF . Cost of the fine - .76% increase to your discount rate and that is if you have straight pass through . If you have tiers on your merchant account statement like “mid-qual” the penalty will probably be much worse, even up to 2.0% or more!

Example two: You own a B2B cigar distributorship, so most of your transactions are with business or commercial cards. You were set up with a payment gateway like authorize.net when you opened your merchant account. When you login in to the gateway to enter a transaction you are not asked for a tax amount. This is results in a downgrade to a card category named Commercial Card Standard. Cost of fine - .85% increase to your discount rate if you have straight pass through.

How is a merchant to know if these downgrades are happening to them? Would your monthly statement tell you? Maybe, but have you tried to read one of those lately? How about your merchant account sales rep? Maybe, but I have spoke to many that did not even know there were more categories than “qualified,” “mid-qualified” and non-qualified” (I am not exaggerating at all!). So what are you to do? Find somebody who knows this stuff. Whether it is me or someone else does not matter just find someone and have them review your merchant account statement. You will be happy you did.

To help you along with this tomorrow I will be writing part two of this post and will provide you with a list of the 10 most important interchange guidelines to know about. In the mean time if you would like me to review your merchant account statement you can fax it to my attention at (714) 624-3833 or fill out the form here .

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