The “New” Cash Discounting Compliance

*I am not an attorney; this is not legal advice.

Visa is back on the attack against non-cash adjustment and other forms of cash discounting.  They are working with large acquirers for enforcement.  Fines are being levied.  The time has come to pivot if you are offering cash discounting.  While I still personally support Non-Cash Adjustment programs as compliant under the Durbin Amendment and as a clear representation of the free speech rights guaranteed to business owners in the constitution and affirmed in several high-profile court cases, there are new threats to these programs that should give you pause.  As I see changes in the marketplace over the last few months in the activity by States’ Attorney Generals, the card brands, and the large acquirers, the risk of offering non-cash adjustment type programs has become high.

While I am creating an in-depth guide on this topic, I’m offering a quick post today with two tips that you should consider immediately.  Also, scroll to the bottom to see more information on a memo released by Visa to the Acquirers on April 4th.

#1 – Dual Pricing is the path forward.  What is dual pricing?  Dual pricing is when the technology solution at the point of sale offers the merchant a choice between the cash price and the credit price.  I have seen this model work very well at several large organizations through my consulting practice.  I am prepared to endorse it 100%.  I initially feared that consumer feedback would be more negative since this practice is more noticeable.  However, if anything, consumers seem less likely to voice a concern.

Dual pricing puts the payment processing company into full compliance with all fifty states and the card brands, even including New York that requires no calculation at the point of sale.  It does not, however, put the merchant into compliance.  In other words, you can implement dual pricing at the point of sale, offering a clearly defined cash price and clearly defined credit price, but this doesn’t mean the merchant will mirror this strategy on the shelf or menu.

However, the primary threat, as I will discuss below, is ISO level threats of non-compliance.  Visa is poorly equipped to enforce their pricing preferences on a per merchant basis.  So, by bringing your own solution into compliance and educating the merchant, you can avoid compliance action against you / your organization.  Then, in the rare event a merchant receives notification of non-compliance, you can help the merchant implement dual pricing approach on the shelf or menu (when this becomes necessary.) or help them implement compliant surcharging.  Because consumers are much less likely to complain to their bank about dual pricing, the odds are low that you will face this issue.

#2 – STOP placing cash discounting deals with companies that are actively engaged in killing these programs!!!  As merchant sales professionals and sales organizations, we need to get together on this one.  I have nothing against the large acquirers that are actively opposing cash discounting.  This is their prerogative and their business.  What I do not understand is ISOs / Agents who continue to place deals with these companies that have publicly announced they do not support the programs being sold to merchants.

This practice is leaving you open to significant financial risk.  These large acquirers have a unique relationship with the card brands, giving companies like Visa leverage to push their agenda.  In this case, that agenda includes forcing ISOs to stop selling Non-Cash Adjustment (or as they would call it, “Non-Compliant Surcharging”) programs.

There are two very simple questions every agent and ISO should be asking themselves right now. 

1. Who is moving the money for my merchant accounts?
2. Does this company publicly support the type of program I am selling?

Notice: the question is NOT, “Does my ISO support the program?”  Your ISO is most likely beholden to a larger organization that moves the money.  If that organization decides your ISO program is not compliant, they can force the ISO to shut it down.

If you need to find an acquirer that supports these programs, there are several.  These large, well-established payments companies, should move the money themselves and offer dual pricing as well as show public support for these programs.   Feel free to schedule a call with me to discuss your situation.  I will make myself available next week for quick 15-minute calls.  Just shoot me an email, and I will do my best to accommodate you.  james@ccsalespro.com

VISA Memo

Visa released a memo on April 4th, 2022.  This memo is confidential and I am therefore not at liberty to share the entire text, but here is a brief sketch of the contents.

This memo, sent to Acquirers and large payment processing companies, begins by explaining that, “Visa has been conducting random on-site audits of Merchants across the United States and continues to find many of them in violation of one or more of the following Visa Core Rules and Visa Product and Service Rules, related to surcharging…”  The go on to provide a list of common violations that include:

• Surcharge was assessed on a Debit Card transaction.
• Surcharge amount exceeds cost of acceptance or super cap volumes.
• Surcharge disclosure signage violations.
• Merchant has not registered with Visa prior to commencing surcharging.
• Non-compliant deployment of Cash Discounting.

The memo then goes on to place the responsibility for ensuring compliance with their rules on the “Acquirers.”  (Think FIS and FISERV)

At the bottom, the memo states, to the acquirer receiving this memo, “you have 60 days from the date of this letter to conduct internal reviews and to complete and return the attached form.  In addition, each Acquirer is expected to disclose the names of their registered ISOs that offer surcharging and cash discounting to merchants, and their website address, so that Visa can confirm compliance of our Visa Core Rules and Visa Product and Service Rules, related to surcharging.”

If the acquirer does not respond within this time frame, they will be hit by a $25,000 fine for starters.

It is time to take action!  Let’s get out of ahead of this one.  Stay tuned for more podcast episodes, merchant sales insights and live events around this topic.