Archive for the ‘New Tax Rules Visa’ Category

MasterCard has revised their convenience fee rules (email me for a copy) so that basically, they now say you cannot disadvantage the MasterCard brand.  So, if you are a Tax Collector offering Visa’s Incentive $3.95 convenience fee on tax payments made with a Visa debit card, you must also offer MasterCard at the same price ($3.95 regardless of the transaction amount)… if you want to offer MasterCard debit acceptance, with a convenience fee, alongside Visa debit.

MasterCard has always allowed this (but never required it until now) and, unlike Visa, they never associated a lower interchange (what they and their issuing banks charge you or your vendor) so that money was not lost on these transactions.  For example, under MasterCard’s current interchange rates, a $1,000 tax payment would cost you or your vendor 0.8% ($8) + $0.25, plus communication fees and dues and assessments (roughly a total of $9 for the transaction) but if you or your vendor can only charge a convenience fee of $3.95, that’s a loss of $5 on each transaction and no vendor is going to do that.  Visa reduced their interchange for tax payments with a debit card to a fixed $2.50 when they announced their incentive convenience fee for tax payments with a Visa debit card in October 2008.

MasterCard’s postponement nicely coincides with MasterCards and Visa’s scheduled October/April rules and interchange announcements, suggesting MasterCard will offer a revised interchange to address this in April.  This is no doubt also being fueled by Visa’s step up in enforcement of the $3.95 debit convenience fee requirement, which most vendors still don’t do.

Overall this will be good for you, your constituents and your employees as bot major brand debit cards could be offered at the same low fixed fee rate regardless of the amount of the transaction.

Many Tax collector websites have verbiage like this

In order to comply with terms of the credit card merchant agreement, the Milwaukee County Treasurer’s Office cannot accept credit card charges at the counter. All credit card charges must be processed either online or by calling1-877-542-6074

OR like this

Due to VISA regulations, our office can only accept VISA debit or credit cards for online and over the phone tax payments. We cannot accept VISA cards for any over-the-counter transaction. Click here to view the media release regarding VISA cards.

These statements are not accurate.  In fact in Visa’s latest operating rules dated October 2010 page  554 it states

In the U.S. Region, a Tax Payment Program Transaction may be processed in either a Card-Present Environment or a Card-Absent Environment.

AND

In the U.S. Region, a Tax Payment Program Merchant may charge a Convenience Fee for processing a Tax Payment Transaction

AND

The Convenience Fee for a Visa Debit Card Transaction must be a fixed or flat amount not exceeding US $3.95 per transaction, regardless of the tax payment amount.

AND

In the U.S. Region, a Tax Payment Program Merchant that charges a Convenience Fee must process the Convenience Fee amount as a separate Transaction.

In fact many of the same vendors that have advised their customers they cannot accept Visa over-the-counter do not comply with Visa’s separate convenience fee transaction and $3.95 Visa debit card convenience fee rules for their customers online (Card Absent) payments.

Pretty ironic that these vendors are advising their customers not to accept Visa and even worse any credit cards at all, for their card present (over-the-counter) transactions.

If you want to accept Visa over-the-counter and need more confirmation of these rules contact me at jplunkett@governmentpaymentprocessing.com and I will put you in touch with the Visa Vice President of Government Acceptance.

Jim

When Visa launched their Tax Payment Program in November 2008, part of the new rules require payment processors and third party payment service providers to mandatorilyoffer an “incentive” $3.95 (or less) convenience fee on tax payments made with Visa debit cards, regardless of the size of the transaction.  If you or your vendor are assessing a “convenience fee” on tax payments made with credit or debit cards this is required both for online and over the counter (OTC) payments made in your offices.

We have setup dozens of cities and counties for tax payments with convenience fees, that just completed their annual tax collection period.  Visa debit cards exceeded all other forms of payment ranging from 50-70% of all transactions.

Clearly paying a $500 tax bill with a debit card at $3.95 vs. with a credit card for $12.50 or more (2.5%) is an important factor for your constituents that are choosing to use their cards for tax payments. 

You should consider not only the compliance issues but the trends in card usage by your customers if you or your vendor presently does not offer a Visa debit card solution for $3.95 or less.

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

No less than a half a dozen tax collectors in Florida have announced they will no longer accept Visa  since May. Their credit card processor has told them Visa will no longer allow them to accept credit cards and assess a fee back to their citizens.  Visa DOES allow a convenience fee to be assessed back but has specific regulations for both online and in-office transactions.

For ONLINE transactions, that are not tax payments, Visa CAN be accepted with a convenience fe assessed back to the citizen as long as it is a fixed fee regardless of the transaction amount and it is assessed by the city or county …not a third party.  This of course negates about 98% of the online payment scenarios in place because they are run by third parties. Since the convenience fee also must be a FIXED fee and the transaction costs assessed by MasterCard and Visa are percentage based, having a fixed fee is only feasible when you have a good handle on the average transaction amount…like utility bills.

For in office tax payments, Visa can also be accepted with a convenience fee assesed to the citizen, however, certain conditions must be met.  First, the convenience fee must be submitted and processed as a separate transaction and secondly, Visa consumer debit cards must have a “different” incentive convenience fee.  To do this automatically requires an investment in technology that most companies have not and may not be wiling to take.

To add to this conundrum, Tax Collectors in Florida often collect DMV payments in their offices and Visa presently does not allow a convenience fee to be assessed on these payments.

The bottom line is Visa does allow a convenience fee under certain conditions.  these conditions may require special technology from uour solutions provider…make sure you ask.

There is much information and misinformation circulating regarding Visa’s New Tax Payment Program that I would like to comment on:

The new Tax Payment Program effective October 4, 2008 replaces the old Visa Tax pilot program which has concluded.

Registration in the new program is REQUIRED if you or your third party provider is assessing a fee back to citizens on Tax Payments made with a Visa Card.

The Program applies to Online as well as In-Office, Over the Phone and In the Mail transactions.

Variable (percentage based) fees are allowed Except on Visa Debit cards where a fixed fee ONLY must be applied and must not be greater than $3.95 (Visa has established a new interchange rate of $2.50 for payment processors).

The convenience fee transaction and the County/City Fee transaction MUST be submitted as separate transactions.

Most if not all Third Party Service Providers DO NOT comply with these rules. Make sure when you are considering implementing a Tax Payment Program that you ask your solutions provider about the above requirements.

IF YOU WANT A COPY Of Visa’s new Tax Payment Program rules please Click Here