Public Policy Brief No. 11-3
by Joanna Stavins

Recent changes to debit card interchange fees could lead to an increase in the cost of debit cards to consumers. This brief analyzes the potential effects of an increase in debit card fees or in bank account fees by using the results of the 2008 and 2009 Survey of Consumer Payment Choice (SCPC). The main findings are that: 1) consumers with the least amount of education (less than a high school diploma), the lowest annual income (below $25,000), and the youngest age (under 25 years) consider cost to be the most important payment characteristic. It is probable that these consumers would be most affected by an increase in debit card fees, and most likely to change their payment behavior in response; 2) the cost of debit seems to be an important factor affecting consumer payment decisions: consumers who rated the cost of debit cards as low relative to the cost of other payment methods were significantly more likely to adopt and to use debit cards; 3) credit cards were viewed as the closest substitute for debit cards. If the cost of using debit cards rises, consumers are more likely to substitute credit cards for some of their debit card transactions; 4) consumer reaction depends on the type of fee increases: an increase in the cost of debit cards specifically is expected to have a greater effect on debit card use than a broader increase in the cost of maintaining bank accounts; and 5) an increase in the one-time cost of debit card setup could lead to a substantial decrease in the rate of debit adoption.

This brief was revised in April 2012.

JEL Classifications: D14, G21

Full-text brief

Source: http://www.bostonfed.org/economic/ppb/2011/ppb113.htm

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The Federal Reserve has released a set of frequently asked questions (and answers) about “General-Use Prepaid Cards and Circumvention and Evasion”. Given the Regulation II exemptions for certain reloadable prepaid cards, there seems to be a lot of industry questions about what exactly can be done with a general-use prepaid card and still have the card considered exempt from Regulation II interchange caps.

To see the frequantly asked questions and answers please visit: http://www.federalreserve.gov/paymentsystems/regii_faq.htm

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Minneapolis, MN (PRWEB) September 12, 2011

mPay™ Gateway today announced that it has entered into an agreement with MasterCard Worldwide to expand MasterCard acceptance through support of mPay Gateway’s point-of-care payment system.

mPay Gateway simplifies the administrative side of patient billing for healthcare providers by providing easy-to-use tools that address patient payment obligations at the time of service. mPay Gateway’s point-of-care patient payment software calculates what the patient owes, authorizes payment at the time of service, and automatically collects the outstanding patient obligation after the insurer has settled the claim, eliminating the expensive and laborious statement process.

“Patient payments are the fastest growing portion of healthcare providers’ revenue streams, but they traditionally have one of the lowest collection rates,” said Brian Beutner, chief executive officer of mPay Gateway. “Working with MasterCard, our technology is addressing inefficiencies in the patient payment process to streamline transactions and increase payment transparency so that providers can improve cash flow and better align with their patient’s payment preferences.”

mPay Gateway makes it simple for healthcare providers to accept card payments as a standard operating procedure. The company’s software also helps healthcare providers improve cash flow through faster receipt of funds while offering their patients an easy, convenient and secure way to pay for services.

“Over the past decade, we’ve seen a shift in the benefits landscape, with consumers becoming increasingly responsible for their medical expenses,” said Steve Carnevale, senior vice president, Group Head, U.S. Market Development, MasterCard Worldwide. “As people’s preferences for electronic payments continue to increase over cash and check, technology like the mPay Gateway is helping healthcare providers better serve their patients while improving their bottom line.”

By accepting electronic payments made on a MasterCard card, healthcare providers can provide their patients with the healthcare services they need, when they need it, regardless of their insurance arrangement. In turn, providers realize improved cash flow with more timely payments, while reducing overhead and billing related expenses.

About mPay Gateway, Inc.
mPay Gateway develops financial technology products and services to support health care’s complex and unique payment environment. mPay Gateway empowers health care providers with a single-source payment solution that enables collections from patients regardless of the patient’s third party payer affiliation. mPay Gateway is a PCI certified acquiring card processor. For more information, visit http://www.mpaygateway.com.

About MasterCard
MasterCard is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities—such as shopping, traveling, running a business and managing finances – – easier, more secure and more efficient for everyone. Learn more at mastercard.com or follow us on Twitter @mastercardnews.

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Source: http://www.prweb.com/releases/2011/9/prweb8786723.htm

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Silicon Valley Bank (SVB) has announced a new service that will allow its clients to accept 85 different online payment types from their customers globally.

“Our tech-focused clients are selling internationally, even at their earliest stages, so we make every effort to make it easy for them to operate globally,” said Pradeep T. Moudgal, Head of Global Cards and Merchant Services, Silicon Valley Bank. “Our clients will find our new payments service is extremely convenient, giving them the ability to deposit funds of any major currency directly into their SVB multi-currency or in-country accounts.”

SVB’s card processing services are provided through Merchant e-Solutions and Adyen, its international card processing partner.

Source: http://www.paymentsnews.com/2011/08/silicon-valley-bank-introduces-international-online-payment-service.html

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iZettle, a new Swedish startup, today launched their mobile payments acceptance product in the Swedish Apple App Store, with more countries to follow. They follow the Square model pretty closely, with the addition of EMV support.

          “‘Nothing is more important to iZettle than security. iZettle is EMV (Europay, MasterCard and VISA) approved and compliant with the Payment Card Industry Data Security Standard (PCI-DSS). No sensitive data is ever stored on your iOS device or iZettle reader, and all data traffic is encrypted.”

Source: http://www.paymentsnews.com/2011/08/izettle-aspires-to-be-the-square-of-europe.html

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