Until a few years ago, payment card processors and merchant acquirers found it relatively easy to incorporate biannual April and October updates of interchange-rate tables and other mandates from the payment networks into their systems.
But as the networks began to issue “off-cycle” requirements, such as an authorization fee assessed on acquirers in March 2009 (
Now merchant acquirers, through the Electronic Transactions Association, want the networks to return to a regular schedule as much as possible.
The Washington, D.C.-based organization issued a “guiding principles” document Feb. 8 that petitions all four payment networks–Visa Inc., MasterCard Worldwide, Discover Financial Services and American Express Co.–to “establish and adhere to a standard release cycle for promulgation of all rule changes.”
The association wants a minimum of a 90-day deadline from the date of public notification to comply so acquirers have enough time to make any changes and an additional 30 days to ensure compliance with any amendments to updated releases, among other requests.
The principles document also asks that any changes required outside of the standard release cycle receive approval from the payment network’s chief executive.
Of the four networks, only Visa responded to a PaymentsSource inquiry by deadline.
“Visa understands and appreciates the importance of timely communication to stakeholders, and this continues to be a key consideration in our planning process,” the card network noted in a statement.
More and more, the tether to April and October for interchange rate changes and other mandates has loosened, Rick Pylant, president and chairman of the Electronic Transactions Association and president of CoCard Marketing Group LLC, a Nashville, Tenn.-based independent sales organization, tells PaymentsSource.
“The payment networks put out mandates that we have to comply with on what used to be a pretty regular basis in April and October,” Pylant says. “They’re arriving later with not a whole lot of heads up.”.
Pylant acknowledges that the networks’ changes in frequency and pace are not being done with malice. “At the same time, we know they need flexibility,” he says.
As for the authorization fees Visa and MasterCard mandated on merchant acquirers, Pylant says the networks did not view the change as a merchant fee that would have required significant alterations. Still, ensuring the fee was properly collected and tracked required software changes for processors and merchant acquirers, he says.
Despite the past, Pylant see the situation improving already. The payment networks are improving their openness and are attempting to better understand potential unintended consequences of their mandates, he says.
Acquirers realize the payment networks, now all publicly traded, have obligations not just to their customers, but to regulators and shareholders, Carla Balakgie, the association’s CEO, tells PaymentsSource.
This issue has simmered for a couple of years, but the organization representing the acquiring industry considered it appropriate to make the matter public now because of all the attention on the payments industry.
“It’s an acknowledgement that as an industry we now have government regulators imposing mandates on our world, over which we have no control,” Balakgie says. “It would be in our collective best interest if we could get our own industry practices into a proficient system and to demonstrate that we can regulate ourselves.”
The petition is not an effort to tell the payment networks how to run their businesses, Balakgie says. “We’re not telling them what the rules should be,” she says. “This has to do with, ‘What helps us helps you.’”
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