Web Hosting Talk : Web Hosting Main Forums : Ecommerce Hosting & Discussion : What does this new visa law mean?

[Frosty]

I've had this notice in my merchant statements about some stupid new visa law for quite some time now. I live in a cave so am not sure what that is.

What does that new visa law mean if anyone knows what i'm talking about? I am too lazy to type the notice here.

[joshiee]

Which kind of Visa are we talking about.. The credit card or the other one

[aliston]

lol I am pretty sure Frosty means credit cards... I got something in my last statement saying something also, but I didn't really read it either

[Frosty]

Ah, guess i'm foced to do it. Had to type it out.. or at least some of it... actually the below is pretty much all of it

"new procedures will soon go into effect as result of the settlement reached in the merchant lawsuit in re visa check/mastermoney antitrust ligitgation (u.s. district court case no. 96-cv-5238). effective january 1, 2004 you will have the choice of discontinuing acceptance of either visa credit or debit. If you decide to stop bla bla bla...."

What is the above all about?

[ericabiz]

Sounds like Visa and Mastercard settled a lawsuit and now you can choose to ONLY accept Mastercard, or choose to stop people from using Visa debit cards (which often carry different transaction rates.)

[ozzie123]

I just don't get it

[Incognito]

Visa and Mastercard had required all merchants who accept credit cards to also accept debit cards. However, they charge a higher fee for Debit Cards when you use them as a Credit Card. Now, they can no longer require that. So, some companies will stop accepting Debit Cards to be used as a credit card. They may still accept Debit Cards to be used as Debit Cards - like an ATM where you enter your pin. Walmart was the first to announce no more debit cards as credit cards for Mastercard.

[cdgcommerce]

That's exactly correct. The specific rule that used to apply was the "honor all cards" rule from Visa & MasterCard. That has been amended as a result of the law suit.

The big advantage of processing a PIN-based debit card is that a merchant pays only the debit per trans fee. With signature-based debit (i.e. debit being used as a credit card), the merchant pays BOTH the discount rate and the per trans fee.

All that being said, this change is really applicable only to "bricks and mortar" merchants and has virtually no impact on Internet / mail-order merchants.

Of course, it is also interesting to note that while Visa and MasterCard agreed to refund certain fees back to retailers involved in the class action suit and make these changes - they also announced a new cost increase in their Interchange rates almost immediately thereafter. Coincidence? I think not.