I figured I would let most of you get through your 09 tax collection season and 2010 budgets before I started posting again.  Coincidently, I was faced with the challenge of my life,  staying with and caring for my Mom who was diagnosed with pancreatic cancer just before the holidays (we will probably loose her  this month).

One of the most interesting developments in the last quarter of 2009 was the emergence of ONLINE debit payments for Property taxes with a Visa branded debit card, where the payment is processed NOT over the Visa network but over the Interbank Network associated with the card (NYCE, Star, Pulse etc.)

Many cities and counties have accepted “PIN Debit” in their offices because the transaction fees are substantially lower than those assessed by Visa and MasterCard.  These fees are assessed by the Interbank Network associated with the card and required a PIN to be entered at the point of sale other the transaction is processed over Visa/Mastercard’s networks.

Now an online “PIN-less” debit is being offered by many of the Interbank networks that connect ATM machines and point of sale electronic funds tranfer at retail locations and member banks.  Previously a pin was needed to process over these networks, otherwise the transaction would be processed either as a Visa or MasterCard transaction when the card was swiped.  While more costly than the ACH, PIN-debit transactions usually cost merchants considerably less to accept than credit card or signature-based debit card transactions.

Many Third Parties are now offering “Online PIN-less Debit” for tax and other payments.  Meaning that if you have a Visa branded debit card and you use these third parties, your transaction will be processed over the Interbank Network associated with the card instead of Visa’s network.  This also means the third party that is collecting your fees pays a much smaller transaction.

It also means that Visa does not get this transaction revenue.  Presently this appears to be a violation of Visa’s Tax Payment Program Rules.  However, I have yet to get an opinion from Visa on this.

If in fact your Third Party is offering this and assessing the fee back to your citizen, you should be aware that the third parties transaction fees have decreased substantially and this should be passed along to the public.

I would appreciate comments….which I will respond to, while we wait to see see how this issue plays out with Visa.

Jim