Businesses that have opened a new merchant account for their retail website may soon benefit from a recent Federal Reserve Board ruling that will affect the transaction fees they pay to debit card issuers..
PCCG Payment Processing Blog
Federal Reserve’s debit decision could save online merchants money
By Patricia Carlin Consulting Group
Businesses that have opened a new merchant account for their retail website may soon benefit from a recent Federal Reserve Board ruling that will affect the transaction fees they pay to debit card issuers.
On June 29, the Fed announced it reached a final ruling on the Debit Card Interchange Fees and Routing regulation, an issue mandated under last year’s sweeping Dodd-Frank financial reform act. Per its rule making, the Fed capped the interchange fees merchants would pay to debit card issuers at 21 cents plus 0.05 percent of the sale total. Prior to the decision, card issuers could charge merchants as much as 15 cents plus 1.6 percent of the transaction.
In a release, Fed chairman Ben Bernanke said the board would closely monitor how the rule affects merchants, financial institutions and other stakeholders.
The Fed’s new rule goes into effect October 1, meaning e-commerce merchants have about a month to discuss the changes with their merchant account manager and consider a new marketing approach.
Since debit card transactions will likely become cheaper for businesses to process, some experts believe merchants will begin to encourage customers pay for items online with their debit card rather than their credit card. However, merchants themselves appear uncomfortable influencing consumer payment behavior.
The website Internet Retailer surveyed 112 merchants – the majority of which were online retailers – on the new regulation. The report found that 39.6 percent of respondents were not even aware that debit payments would become more affordable in the weeks ahead. Additionally, 43.2 percent said they won’t make a concerted effort to push customers toward debit payments, while 17.1 percent said they do plan to encourage consumers take the option that’s more affordable for the merchant.
Whether or not they look to actively encourage debit card payments, e-commerce ventures will likely welcome any opportunity to lower processing expenses, particularly as debit transaction volume continues to grow. The Fed reports debit card use has grown by double-digit percentages in recent years, and estimates its volume to exceed 50 billion transactions this year.
Her Experience Is Everything
Leading expert in Card-Not Present Payment Processing and Merchant Account Management.
More From The Blog
A strong payment platform is key as the holiday season approaches. In a tight economy, consumers may want to spread their holiday spending out over the course of a few months, which means merchants will need to have their websites optimized sooner rather than later.
The act of swiping a credit card in the checkout line of a store could soon be replaced by the act of waving a smartphone in front of a sensor, which may have greater implications on mobile commerce and internet retailers that provide..
Customers are often on the lookout for bargains, price breaks or anything that convinces them that they are obtaining a great value for a service or product. That’s true whether they are shopping in a brick-and-mortar outlet or at a retail website.
Owners of international, high risk or emerging businesses that require merchant accounts to accept credit cards online have many factors to consider when choosing a reliable merchant service provider.
Online merchants face more risk than ever. With the continued evolution of mobile payments and emerging technology, fraudsters are finding new vulnerabilities to exploit and new ways to steal money from your bottom line. Unfortunately, there’s also another culprit lurking around, often unknowingly denting your bottom line – the overuse of fraud tools.
Once a company determines it requires a high-risk merchant account, it must perfect its customer service model. In an era driven by social media interactions, the consumer-business relationship is more direct than ever before.
Established internet businesses may eventually find that the opportunity is ripe for them to expand to different international markets. This can be a critical step in the progression of any business, and entrepreneurs need to ensure they’re approaching this milestone with caution.
A new study on the buying activity of consumers using tablets may encourage more businesses to develop a mobile payment strategy that accommodates the devices. Arranging such a payment service in conjunction with offshore merchant accounts may allow companies to tap into a profitable market at a lower cost.
With the limited supply of US merchant banks that want this business and the increase in affiliate and friendly fraud targeted towards the dating industry, it is virtually impossible to keep a dating website live long-term..
Whether they are working with domestic-based merchant accounts or offshore merchant accounts, e-commerce businesses need to keep on top of the money they spend to maintain these financial tools…