Toughey Talks

Regulations

Visa Says "Yes" to Higher Education
November 6, 2012

A very big announcement by Visa may be overshadowed by today's election. After years of saying "No" to percentage-based convenience fees for tuition, Visa reversed its position. As of today, Visa will now allow percentage-based convenience fees for Higher Education just as they do for Government payments. This means that qualified Visa credit transactions can have a surcharge added based upon a percentage of the payment amount. Although effective today, the new program may take some time to get started because payment processors must adapt to the new Visa rules.

In September, I wrote that Visa was moving towards variable fees as part of their settlement in a long-running class action suit. (See Visa Says "Yes" to Surcharge... Maybe.) I said that the issue was "a kaleidoscope of moving parts." Well, this part of the trend is very much your friend, and it's moved to help Higher Education now, separate from any settlement actions.

Schools, for years, have wanted to include Visa credit card transactions in their convenience fee programs. But Visa's rules prevented percentage-based rates and convinced most schools to avoid the inclusion of Visa transactions. Visa is looking to regain the lost acceptance by Higher Education merchants. So they've added Higher Education to their special government payment program, which does allow percentage-based fee rates.

Two transactions must occur in this arrangement, one for the cardholder purchase of goods or services and the second for the added service fee. Plus, the percentage-based rate applies only to SEC 8220 (tuition, fees, and fines) transactions, not for all campus payments. Nonetheless, Visa's inclusion of Higher Education in its special program is another illustration that merchants are gaining ground in their efforts to control payment expenses.

Thanks for reading.


Dan Toughey
dan.toughey@touchnet.com