by Ben Dwyer In 2012, Visa added a Transaction Integrity Fee to its list of charges for accepting a Visa credit card at a business.
Effective April 13, 2012, Visa began charging a Transaction Integrity Fee (TIF) of $0.10 on transactions involving Visa debit and prepaid cards that do not meet CPS requirements (more on this later). The Transaction Integrity Fee will not apply to Visa credit card transactions.
- Transaction Integrity Fee
- Details of the Transaction Integrity Fee
- Transaction Integrity Fee and Your Business
- [Speculation] Reason for the Transaction Integrity Fee
- Locating the TIF on Statements
- Lowering Your Credit Card Processing Costs
Transaction Integrity Fee
The TIF will not affect a large number of transactions, as it will only apply to a few specific types of businesses and transactions. I’ve detailed the situations in which the fee applies.
Debit and Prepaid Cards
The TIF applies only to transaction involving a Visa debit or prepaid card. It does not apply to a transaction involving a credit card. Note that debit cards “run as credit” are still considered debit cards, and the TIF fee may be assessed on those transactions.
Non-CPS Qualified
The acronym CPS stands for Custom Payment Services. CPS is a qualification that applies to a broad range of Visa interchange fees that represent the lowest rates for a given category. Each time you process a payment, the transaction must meet CPS guidelines to qualify under a CPS interchange category.
The Transaction Integrity Fee does not apply to transactions that qualify for CPS. Therefore, the most common transaction to incur the transaction integrity fee will be keyed in debit card transactions that are processed without address verification information (AVS). Such transactions will qualify to EIRF or Standard interchange categories instead of CPS.
Related Article: Visa CPS Qualification.
U.S. Issued Cards
The Transaction Integrity Fee applies only to U.S. issued cards. It does not apply to transactions involving cards issued outside of the United States.
Settled Transactions
The TIF applies only to settled transactions. It will not apply to authorization transactions that do not have a corresponding settlement transaction.
Business Types / MCC
A business’ merchant category code (MCC) can have an impact on how its transactions qualify at interchange. Businesses classified under MCC codes 5962, 5966, and 5967 (high-risk telemarketing) are not eligible for CPS qualification. Therefore, the TIF will apply to every debit and prepaid transaction processed that involves a U.S. issued card.
Details of the Transaction Integrity Fee
The following is a list of additional important details about the TIF:
Flat $0.10 Transaction Fee
The Transaction Integrity Fee will cost a flat $0.10 regardless of the volume of the transaction.
Separate From Interchange
Although interchange (CPS qualification) is a factor that is used to determine when the Transaction Integrity Fee will apply, the charge for the TIF is not dependent upon interchange.
Durbin and TIF
The TIF will apply equally to both Durbin regulated and unregulated debit cards. Follow this link to learn more about how the Durbin Amendment capped the interchange fee that certain banks were allowed to charge for debit card transactions.
Transaction Integrity Fee and Your Business
The TIF will most commonly apply to card-not-present transactions. Below, I’ve detailed how different types of businesses can expect to feel the impact of the TIF.
Retail
Businesses that swipe the majority of transactions and that enter AVS information when keying-in transaction will see very little impact from the TIF.
Card-Not-Present: Mail-Order, Telephone-Order, E-Commerce
Businesses that process the majority of transactions in a card-not-present environment must ensure that AVS information is being provided to minimize the impact of the TIF. Otherwise, you may see a lot of TIF on your statement.
Processor Pricing and Billing
The separation of the TIF from interchange will impact how processors pass the cost of the charge to their merchants. Since the TIF is a relatively sizable transaction-based fee, processors typically bill it as a separate line item.
Reason for the Transaction Integrity Fee
It’s widely speculated that the Transaction Integrity Fee is Visa’s response to the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, we tend to disagree with this viewpoint for a couple of reasons:
The TIF is Not Widely Applicable
The Durbin Amendment had a substantial impact on interchange income across every debit interchange category. But the TIF fee is very limited in its application. If Visa’s members were intending to recoup interchange losses due to Durbin, the fee imposed would have been of a lesser amount and applicable to a wider array of transactions.
The TIF Encourages… Well… Transaction Integrity
The TIF only applies when a transaction does meet CPS qualification, or in other words, when a transaction does not include complete data. Therefore, it will most commonly impact businesses that process higher risk card-not-present transactions without the safeguards (AVS) that Visa demands for proper qualification.
In our opinion, the TIF will function as an incentive for businesses to conform to existing interchange qualification than as jab at Senator Durbin.
Locating the TIF on Statements
You may or may not be able to see the Transaction Integrity Fee on your monthly processing statement. Businesses on a “flat rate” pricing model will not see individual assessment fees, but businesses on tiered/bundled or pass-through pricing will.
In the statement snippets below, all of the processors call the fee a recognizable name. You can also see that they list the cost of the fee and the number of transactions to which it applied, allowing you to check the math.
However, CardFellow clients do not need to check their statements manually. Instead, we’ll check your interchange and assessment fees as part of your free statement audits.
Lowering Credit Card Processing Costs
If you think your credit card processing costs are high, you’re probably right. At CardFellow, we help businesses find the most competitive processing solution, and many of our clients were overpaying when they first came to CardFellow. So if you’re looking to lower your credit card processing rates and fees, try our free quote comparison tool. You’ll get instant, no-obligation quotes from leading processors, and CardFellow’s independent experts are on hand to help you weigh your options.
