Another Turn of the Screw (part2)

[fsck]

CCBill
Tom Fisher of CCBill spoke with AVN Online?s Technology Editor, Kathee Brewer, who reported his follow-up comments as follows:
The new rules, as Fisher understands them, apply to all IPSPs, not just those who deal with certain kinds of clients. He said the introduction of the acronym "IPSP" is to facilitate referential "shorthand" for VISA.
Regarding the requirement that "IPSPs are required to provide VISA with monthly sales, chargeback and credit data," Fisher said, "That information has always been available to them [VISA], but what they´re doing is putting the burden for reporting it on the processor. It means a little more work for us."
There´s still quite a bit of confusion on the part of the IPSPs about what is meant by "IPSPs can only register Sponsored Merchants in the country where the Sponsored Merchant has a presence." Epoch, CCBill, and iBill are attempting to clarify that through their acquiring banks, because VISA doesn´t seem to want to talk to the IPSPs directly about it, but basically, that particular point breaks down for Fisher thusly:
VISA is a consortium of banks that are broken into six regions scattered around the globe. The U.S. composes one region. Others encompass Europe, Asia, Australia, etc. Each region has a governing board composed of representatives from the acquiring banks (the ones that process the charges) and the issuing banks (the ones that issue credit cards - some banks do both). Each of the regions also has representatives on the board of VISA International, which is the main governing body. Each region is free to set its own rules for its member banks, and sometimes VISA International upholds those rules for everyone, but sometimes it doesn´t. Fisher said he thinks this new set of rules comes down from VISA International.
Each VISA member bank has a contract with VISA under which both entities operate. In turn, merchants who accept VISA as a form of payment have a contract with an acquiring bank (the one that processes charges), not with VISA itself. When VISA makes a rule, it tells the acquiring bank with which it has a contract, "If you don´t do this, then we´ll fine you or yank your ability to process VISA payments." The bank, in turn, says to its affiliated merchants, "If you don´t do this, VISA has threatened to fine us or yank our processing capability, so although we appreciate all the money you bring in, we don´t want to lose all the money we make from our other clients. Violate this rule and we´ll pull your ability to process VISA, plus we´ll probably fine you."
Under VISA´s definitions, IPSPs function as giant merchants. Their contracts are with their banks, not with VISA itself.
One of the problems in the Internet age is that acquiring banks were getting upset with each other because - since most e-commerce still takes place in the U.S. and the U.S. is home to all the big IPSPs - the banks in the U.S. region were getting the lion´s share of the acquisition fees (which compose quite a chunk of their income). To address that, several years ago VISA International instituted a rule disallowing cross-border acquiring - meaning the bank and the merchant with which it had a contract for merchant services had to be located in the same geographic region (basically, in the same country). Until now, that rule hasn´t been enforced very diligently (if at all). The new rule about registering sponsored merchants only in the same country is an attempt to get tough about that rule.
What the IPSPs are trying to clarify is what constitutes "same country" residence. Is it any branch office? Headquarters only? The country where the charge capturer and merchant pay taxes? "Web server and ISP location have nothing to do with it," Fisher said.
Fisher´s entirely hypothetical example was Wal-Mart. (Wal-Mart, ironically, is suing VISA for alleged anti-trust violations.) Say Wal-Mart has a store in England through which it processes VISA charges. To minimize its expense and accounting red tape, Wal-Mart would like to run all those charges through one merchant account assigned to its corporate headquarters in Bentonville, Ark. British banks, understandably, probably would cry "foul!" because they´d be losing the acquisition fees to a U.S. bank, even though the purchases were made in England. VISA International steps in, and because it´s already established a prohibition against cross-border acquiring, it says to Wal-Mart, "Look, we understand what you´re trying to do here, but the money really needs to stay in the U.K. You´re going to have to set up another merchant account for all your stores in England and process all the VISA charges through a British bank, or we´ll fine you and/or yank your merchant account privileges worldwide. You´ll never do VISA business in this town again."
PSW Billing
PSW Billling is a Rhode Island-based aggregator that did not participate in the issued statement, but did release a press release on Oct. 4 that dealt with the new regulations. The timeliness of the release, and the new services offered in response, indicate that these new services were on the drawing board long before the announcement last week. It reads, in part:
"In an ongoing commitment to keeping options open for clients and other industry merchants, PSW unveiled the following service updates and additions:
"ePaymentPro, a complete online billing solution, will allow clients to accept Online Checks, VISA, VISA Debit, MasterCard, MasterCard Debit, and JCB. The registration fees will be required for continued service provisions.
"ePaymentLite, an economical online billing solution, will allow clients to accept Online Checks, MasterCard, MasterCard Debit, and JCB. There will be no registration fee, no setup costs, and no periodic maintenance fees." [Notice, of course, the absence of VISA from this option.]