Visa Granting Lower Fees And Less Rules for High Risk Merchants

May 27, 2014

Visa Inc. is shaking things up. During the company’s second-quarter earnings call the CEO Charlie Scharf told analysts about the company’s upcoming changes.

To begin, Visa is lowering or eliminating several of its merchant acquirer fees for those who generate less than $15,000 in gross annual Visa sales. Also, the company will eliminate at least half of its operating rules.

Additionally, Visa is pushing for industry collaboration in regard to security and the transition to the use of EMV (Europay, MasterCard, and Visa). Over the next year, the company will also likely begin tokenization services with its issuing, processing, and acquiring partners.

Another segment of the call was focused on the current political situation in Russia. Visa executives are anticipating the fallout from Russia’s standoff regarding Ukraine.

The United States, having established economic sanctions against Russia, is forcing Visa to block transactions from two Russian banks. While those two banks only represent 1% of Visa’s volume in Russia, the company has 100 million cards in Russia.

The company will comply with any sanctions or laws in the U.S. though currently the card company still works with other clients in the affected area. Russian President Putin has expressed that by complying with the U.S. sanctions, card companies such as Visa are undermining trust among Russian citizens.

Meanwhile, Russian leaders have begun to initiate changes that could create problems for Visa. Domestic data processing within Russia could be impacted. All this happens as Russians work toward implementing a settlement center wholly owned by the Central Bank of Russia. Russia could also impose fines on foreign payment system providers.

While this news hasn’t been positive and Visa will reconsider its domestic processing opportunity in Russia, the company still hopes to be a part of the growth of electronic payments within Russia. If Russia decided to launch its own national payment system, it would be difficult for major card brands to compete.

Aside from these issues in Russia, Visa also plans to expand in Japan and has acquired 100% of GP Network Corp. The company specializing in front-end data capture and network services for credit card transactions also deals with the administration and maintenance of stored data in merchant terminals.

The company has posted good second-quarter results with U.S. debit revenue rising 6.4% to $408 billion and U.S. credit revenue going up by 10.2% to $281 billion from the previous year. Internationally, debit rose 6.4% to $574 billion, and international credit rose 4.9% to $463 billion from the previous year.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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