Wednesday, February 24, 2010

Retailers Take a Swipe at 'Swipe Fees' While Internet Retailers Only Wish They Could Pay Them

                                     Internet Retailers Can Only Wish Visa would Charge Them "Swipe Fees"
CNN Politics published an article about 15 minutes ago which reports that more and more merchants are "up in arms" about Swipe Fees

Swipe Fees are a cost of doing business.  If you don't like them, you can refuse to take Visa/MC cards.

Personally, I think they should focus more on why Visa has been pushing (with rewards) signature debit cards over the 12.5 times more secure PIN Debit cards.  That fact alone robs merchants of millions of dollars annually.

PIN Debit rates are SIGNIFICANTLY LOWER, because they are SIGNIFICANTLY MORE SECURE.  If you own a retail brick and mortar establishment, steer your customers towards the PIN Debit option.  Not only will it save you more on Interchange, it will virtually eliminate charge-backs. 

Of course, if you are an Internet Retailer, then you are SOL.  Wouldn't it be "GREAT" just to be able to pay "Swipe Fee's?

Internet Retailers "would probably maim" simply to have have the "right" to pay "Swipe Fees."  They would "kill" for the right to pay PIN Debit fees. 

But alas, Visa won't allow "Swipe Fees" for online transactions because they make way too much money on Non-Swiped "Card Not Present" Fees. 


The MORE SECURE the transaction, the LOWER the FEE. 

The "LESS SECURE" the transaction, the HIGHER the FEE

Visa, MasterCard, American Express, Discover and JCB evaluated HomeATM's eCommerce based PIN Entry device.  The stringent evaluation resulted in the first-ever (and still to this day, world's only) PCI 2.0 Certified PIN Entry Device.

Yet, here we are, almost a year later, and there is no PIN Debit Interchange Rate for Internet-based transactions.  Worse yet, there isn't even a "card present" rate. 

Internet Retailers could ask the logical questionWhy can't we process a more secure transaction when these insecure one's are costing us millions while making you millions? It ain't right...

Put another way: "How can Visa, MasterCard, Discover, American Express and JCB evaluate and then PCI 2.0 Certify a PIN Entry Device designed for eCommerce use, and then not offer "card present" and "PIN Debit" rates on transactions conducted via that same device? 
HomeATM made history.  We not only created the first eCommerce PCI Certified PED, it's apparently the first ever certified PED in history that cannot *conduct "card present" OR "PIN Debit" transactions. (*denotes sarcasm)  Wonder what it WAS certified to be able to do?*

When you consider that PIN Debit is preferred by both merchants and consumers alike, then add the fact that (at least in the UK) "card not present" fraud consists of 87% of the total fraud committed, you have to wonder why Visa is keeping "card present" and "PIN Debit" transactions off the web.  UK "Card Not Present" Fraud Responsible for 86.6% of Total

ESPECIALLY in light of the fact that their solution to securing an online transaction is to keep the card not present and just typing more numbers into boxes in browsers.  No wonder Verified by Visa, was recently exposed as a "Textbook Example of How Not to Authenticate a card user." Verified by Visa: "Textbook Example of How NOT to Design an Authentication Protocol"

Visa can charge significantly higher fees when the card is not swiped thus the Internet is a cash cow for them. Allowing for Swipe Fees would be taking money out of their pocket.

Unlike the brick and mortar world, where some merchants feel they should have the right to "negotiate" Swipe Fees, Internet Retailers cannot even "negotiate" the right to pay "Swipe Fees"

One could argue that eMerchants are prevented by Visa...or at least "excluded" ...from being able to conduct a "more secure/card present transaction." 

You would think that would fall under one of those "inalienable right" thingamajobbers.  Now if there "wasn't" a PCI 2.0 Certified PIN Entry Device in the marketplace, it would be a different story.  But there is. So why then, are Internet Retailers forced to conduct "card NOT present" transactions.  They can conduct transactions in the same manner conducted by brick and mortar retailers.  Have the customer swipe their card and have the customer enter their PIN at the Point of Sale.  The only difference is that the Point of Sale is the consumers home instead of the retailers rental location. 

Meanwhile, fraud skyrockets and Visa's own security product is exposed as a sham.  "Card Not Present" fraud costs billions of dollars per year, yet Visa want's it to remain the SNAFU status quo.  (in order to rake in millions of dollars at the expense of merchants and consumers.)  Sounds like Internet Retailers would have a better chance of winning a war against the Dynamic Duopoly fighting for CP vs. CNP  than the brick and mortar merchants have with their "right to negotiate" stance. 

From CNN:

  • Merchants pay "swipe fee" when customers use MasterCard, Visa

  • Swipe fees brought in somewhere between $38 billion to $46 billion in 2008

  • Credit card industry says the fees are appropriate because of services they provide

  • Unclear whether restricting fees would mean lower prices for consumers

  • Two Videos, one defending and one taking a swipe at fees.  

Read the Article in Full at CNN Politics by clicking the headline below:

Merchants want Congress to take a swipe at 'swipe fees'

By Kevin Bohn, CNN senior producer
February 24, 2010 10:59 a.m. EST

"The merchants are getting ripped off, it's that simple. There's monopoly power with Visa, MasterCard. They have over 70 percent of the transactions," said Rep. Peter Welch, D-Vermont, who is pushing for congressional action on the issue.

Video: Defending swipe fees

Video: Taking swipe at swipe fees


75% of Organizations Experienced CyberAttacks in Past 12 Months

A new Symantec study found that 42 percent of organizations rate security their top issue. This isn’t a surprise, considering that 75 percent of organizations experienced cyber attacks in the past 12 months.

These attacks cost enterprise businesses an average of $2 million per year.

Continue Reading at Help Net Security

TIO Networks Q2 2010 US$ transaction revenue increases 20%

"30th Consecutive Quarter of Transaction Growth"

, Feb. 23 /CNW/ - TIO Networks Corp., North America's leading multi-channel expedited bill payment network, (TSX-V: TNC), today provided transaction volumes for the second quarter ended January 2010.

% Growth % Growth
in US in CDN
Transaction Dollars Transaction Dollars
Revenue vs. Revenue vs.
Quarter Transactions ($US) Q2/2010 ($CAN) Q2/2010
*Q2/2010 2,031,393 $5,119,733 N/A $5,383,804 N/A
Q1/2010 1,827,699 $4,671,282 9.6% $5,019,192 7.3%
Q2/2009 1,668,571 $4,265,470 20% $5,234,402 2.9%
* The growth trend in month over month transaction volumes increased
substantially throughout the quarter with January recording our best
month ever with 771,210 transactions processed accounting for more
than $2M CAN in transaction revenue.

Business growth with new and existing clients and growing consumer demand for the Company's expedited bill payment products is driving network and revenue growth. The Company continues to aggressively seek new bill payment products, network partners, build on its suite of financial services and add new distribution platforms and endpoints to serve America's increasing reliance on expedited payment products and financial services.

All figures are preliminary and subject to adjustment that will be confirmed when TIO reports its second quarter financial results in March 2010.

TIO Networks Corp.

TIO is the leading multi-channel expedited bill payment processor serving the largest Telecom, Wireless, Cable and Utility bill issuers in North America. With over 20,000 endpoints to its processing network, TIO symbolizes fast, convenient and secure access to expedited payments.

The TSX Venture Exchange has not reviewed this news release and does not accept responsibility for its adequacy and accuracy.

For further information: Behshad Hastibakhsh, Media Relations - TIO Networks, Tel: (604) 298-4636, Ext. 250, Toll Free: (888) 679-3322, Email:;

John Lewis, Business Development - TIO Networks, Tel: (416) 364-2266, Toll Free: (877) 954-6327, Email:


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