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The words "Cash
Discount"
shown in
photo #2
only appear
on an
invoice when
a payment
other than
cash is
selected. If
cash is
selected as
the payment
the words
will not
appear.
In this
particular
case the
merchant's
customer
that placed
the order,
using their
credit card
for payment,
saw the
words "CASH
DISCOUNT"
with an
additional
charge next
to those
words. The
merchant's
customer
then placed
the call
that started
the ball
rolling.
Misconception...
It is
stated
in every
merchant
agreement
with every
credit card
company, "Cash
Discount"
or "Credit
Card
Up-Charging"
is
forbidden.
If somebody
refuses to
pay the
up-charge
and calls
the Card
Company,
most likely
the card
company will
terminate
the
agreement if
no follow-up
action is
taken by the
merchant...
Before we
continue,
let's get
some
misconceptions
out of the
way:
-
The
terms of
a
merchant
agreements
are
non-negotiable
-
It is
illegal
to
charge a
customer
an
additional
fee
because
they pay
with a
credit
card
-
No
amount
of
whining,
explaining,
begging,
or
changing
processors
will get
you an
exception
to this
rule
-
Read #1,
#2, and
#3 again
Generally
what happens
is a
customer
recognizes
the problem,
then calls
their local
issuing bank
who's number
is stamped
on the back
of their
VISA card.
The bank
will then
call VISA
directly.
VISA then
contacts the
processor
(in this
case Nova).
Nova then
contacts the
merchant
(you the
RDS). In
short, this
results in
noncompliance
with VISA.
The Audit...
It is
also
important
to note this
process
should be
considered
an audit...
because
effectively
that's what
it is. The
solution to
the
infraction
is decided
through a
division at
VISA for
final
approval.
Because we
are dealing
a single
person, you
are
essentially
at the mercy
of the mood
and/or whims
of the
auditor
chosen for
the review.
At least
with this
particular
audit, that
seemed to
have been
what made
this case so
difficult.
To summarize
the general
rule; VISA
states no
one can
single out a
credit card
transaction
as a target
for charging
an "additional
fee" as
a means to
offset (or
pass on) the
additional
cost for
being a VISA
merchant to
your
customers.
In addition,
you cannot
use the term
"convenience
fee" or
"card fee"
as part of
any charge
you apply.
With
previous
auditors in
the past,
the change
was
relatively
simple to
implement.
All the
merchant
(RDS) had to
do was
demonstrate
their
operation
wasn't just
charging
this fee for
credit card
transactions,
and show it
was no
longer named
something
that
specifically
pointed to a
credit card
as being the
reason
behind it.
The Rules...
In prior
cases,
other
merchants
had
successfully
gotten
themselves
back into
compliance
by simply
demonstrating
they now
charged a "Processing
Fee"
across the
board, or at
least with a
payment type
other than
Credit Card.
This simple
modification
was enough
to satisfy
VISA, and
thus got
them back
into their
good graces.
This time,
however, it
was
different.
We first
attempted to
show that
the merchant
was not
singling out
Credit Card
users for
this fee by
showing they
had, in
fact, added
the fee to
House
Account
charges and
Check
Payments.
In addition,
they had
changed the
name from "Cash
Discount"
to "Processing
Fee".
That wasn't
enough.
The auditor
assigned to
this case
made the
determination
that we
could not
single out a
"Cash
Payment"
to NOT
charge a
fee. In
addition the
merchant can
not use the
terms "Processing,
Card,
Convenience,
Additional,
or
Surcharge"
in
describing
the fee
name.
Notice now,
how these
rules have
changed...
No longer is
it allowed
to simply
apply
additional
fees to
OTHER
payment
methods...
but now you
are not
allowed to
Single out "CASH"
as NOT
getting the
fee.
What really
muddied the
waters was
the fact
that every
time we
asked, VISA
continually
answered
that the
process of
offering a "Cash
Discount"
was NOT
against "VISA
POLICY",
but we were
not allowed
to actually
use the
terminology
"CASH
DISCOUNT",
as that
would single
out "CASH"
as being
more
beneficial
than any
other
payment
type.
HUH?
To bring a
little
balance to
the
equation,
and to be at
least a
LITTLE FAIR,
VISA is
trying to
protect
their
marketing
image and
name brand
by not
allowing
this type of
fee to
appear on an
invoice.
It's one of
those "everyone
knows it but
no one talks
about it"
type of
scenarios.
Everyone
knows that
VISA charges
for their
services...
but VISA is
hell-bent
on making
sure that
it's not
advertised
or broadcast
in any
capacity.
In the end,
what seems
like the
resolution
to this
scenario is:
-
Change
the Fee
Name to
be an
ADMINISTRATIVE
FEE
-
Show you
charge
the
ADMINISTRATIVE
FEE on
ALL
PAYMENT
TYPES
-
Show a
DISCOUNT
that
cancels
out the
initial
ADMINISTRATIVE
FEE when
the
payment
method
is CASH,
on an
additional
line.
In short,
show the
administrative
fee is
charged
regardless
of the type
of payment,
then
specifically
SHOW the
same amount
as a
discount
ONLY on a
CASH
payment.
We received
the green
light for
this
solution on
June 25th.
Some DMS
modifications
will have to
be made in
pretty short
order to
accommodate
this new
rule.
Rest
assured, now
that we know
WHAT needs
to be done,
we will
modify our
software to
operate
inside the
confines of
the new
rule...
but... one
important
note,
however, is
that like
any other
audit...
compliance'
is
determined
by the
opinion of
whoever is
enforcing
it... and a
new audit is
just around
the corner
from the
next
customer who
decides to
make an
RDS's life
miserable
and calling
the 1-800
number on
the back of
their credit
card. |
DataWedge
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