Payment Processing

Payment Processing News Blog

• EFT Networks Stick It to Merchants

  EFT network NYCE raised interchange for issuers by 1.1 cents in October of 2009. Competitor Star EFT is also changing interchange rates and eliminating fee maximums. Both networks are doing so to incentivize banks to use their networks. Merchants are the ones who will be absorbing the new fees and many merchants will be hard hit. The ones suffering the most will be in the quick-service, medical, and small-ticket areas. Consider a fast-food restaurant that currently pays 1.25% plus 3 cents in interchange. Based on a $10 average ticket, fees will rise a whooping 77%, jumping from 27.5 cents from 15.5 cents. In addition, Star issuers will get an extra 2.5 cents, bringing the total cost of the transaction to almost 30 cents. Star is also eliminating the existing 45-cent maximum, which would have capped the fee on all transactions over $24. Now the transaction fees will increase as the ticket size rises. Medical providers often have co-pays of $15. Under the new changes, the discount rate will stay at 1.2% but the transaction fee will jump from 5 cents to 20 cents. As a result, processing fees the $15 average ticket will jump 65%, rising from 23 cents currently to 38 cents. Star issuers get an additional 2.5 cents so the price rises even more, to over 40 cents. Other small-ticket merchants will see transaction fees rise from 5 cents to 15 cents on all transactions. Plus, an additional 2.5 cents for Star issuers. Once again, merchants suffer while banks and processors manipulate the system to line their own pockets. - 2 years ago

• Credit Card Payments Drop as Alternative Payment Options Surge

  Consulting firm AlixPartners, reported that its recent survey of shopped revealed their top concern was eliminating personal debt. In order to decrease debit, credit card spending is on the decline as shoppers opt to pay for gift purchases with cash or debit cards. Of course, the cutbacks on availbe credit availale on cards also severely curtailed the amount of credit consumers have to spend. The Federal Reserve recently reported that consumer borrowing fell for a record ninth straight month in October. Demand for revolving credit, the category that includes credit cards, fell 9.3%, following drops of 10.5% in September, and 10.6% in August. In all, credit card borrowing has fallen for a record 13 straight months. Alternative payments are taking up some of the slack in the drop in credit card payments. For example, PayPal, saw a 20% surge this quarter over last in customers that opted to pay by echecks instead of credit cards. Echecks are a form of direct debit that deducts payments directly from the consumer’s checking or savings accounts Forrester Research estimates that alternative payment services, now represent 11% of total online payments. - 2 years ago

• Digital Trends for 2010

  DigitalBuzz predictions about digital marketing trends for 2010 include the following: • Facebook replaces personal email. More people will be using Facebook to communicate rather than email. • Cloud computing with subscription billing models will bring open source software applications to the masses. Developers using open source will finally begin to make money for their application development efforts. • Mobile commerce finally begins to take off, primarily due to the iPhone. The key is making purchases easy and inexpensive. • Logins for Facebook will be able to be used cross-application, making it simple for people to participate in many networks without registering. • Community building continues to be important and companies will invest money and resources into using communities to market products and services. • Community building and networks empower individuals to take on complex tasks because they know they have the necessary support. • Data analysis is the defining skill of the internet age. There will be new opportunities for those who can present information concisely and graphically. • Organizations will be able to tap into special interest groups and “crowd sourcing” will become an important part of outsourcing. - 2 years ago