1. Donna Embry NEAA January 30, 2013 Strange Bedfellows in the Payment System

2. Donna Embry NEAA January 30, 2013 Merchant Surcharging Compliance 2013

3. Merchant Surcharging 2013  Background  General Requirements  Considerations for implementation  Resources

4. Merchant Surcharging 2013 Background  In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation (MDL 1720)  $6+ billion dollar class action settlement with merchants who have accepted Visa and MasterCard at any time since January 1, 2004  $6.05 Billion Cash fund for anyone accepting Visa or MC credit or debit cards between January 1, 2004 and November 28, 2012  $1.2 Billion Interchange fee fund for merchants that accept Visa or MasterCard credit cards for an eight month period to start by July 20, 2013  MAY 28, 2013 – opt out of class (does not effect surcharge)  Does not effect acquiring  July 25, 2013 10 bp reduction in Interchange to Issuers for 8months  Mar 2014 settlement paid to merchants  Visa and MasterCard acceptance rules modification required…notably surcharging  Class Counsel appointed

5. Merchant Surcharging 2013 Background  Nov 2012 US District Court for the Eastern District of NY preliminarily approved the merchant class settlement agreement  Visa and MasterCard are required to permit merchants in the U.S. and U.S. territories to surcharge certain credit card transactions beginning January 27, 2013  Acquirers must notify merchants within 30 days of the respective publication of changes (Dec 20 – Visa VBN and Dec 22 – MasterCard) outlining the changes (Most acquirers have provided the notification with the December billing Statement that went out in January)

6. Merchant Surcharging 2013 General requirements  States prohibiting surcharge  Effective date of implementation  Transactions allowed to be surcharged  Allowable surcharge  Disclosure requirements

7. Merchant Surcharging 2013 States prohibiting surcharge  California  Colorado  Connecticut  Florida  Kansas  Maine  Massachusetts  New York  Oklahoma  Texas

8. Merchant Surcharging 2013 Effective date of implementation  Merchants cannot surcharge before January 27, 2013  Merchants are required to notify Visa and MasterCard and their acquirer 30 days prior to surcharging  Visa – Merchant Surcharge Notification Form  MasterCard – merchant registration

9. Merchant Surcharging 2013 Transactions allowed to be surcharged  Credit cards only  No Debit or Prepaid cards  No signature debit  Brand level  Product Level (Traditional, Rewards, Signature, World, etc)

10. Merchant Surcharging 2013 Allowable Surcharge  4% cap  Must not exceed the cost of acceptance  Preceding one month  Discount rate  Interchange + fees  Fairness rule  Competitive “level playing field”  Consistent with all cards being surcharged  Consistent with all credit cards acceptance rules

11. Merchant Surcharging 2013 Disclosure requirements  Signs at point of Entry  Physical and on web sites  Example: We impose a surcharge on credit cards that is not greater than our cost of acceptance  Signs at the POS  Example: we impose a surcharge of _% on the total transaction amount on credit cards, which is not greater than our cost of acceptance. We do not surcharge debit cards.  Customer Receipt  Itemization of the final surcharge amount must be identified separately on the transaction receipt.

12. Merchant surcharging 2013 Considerations for implementation  Processor readiness  POS readiness  Operational readiness  Merchant registration  Merchant signage  POS application changes  Merchant training  Customer support

13. Merchant surcharging 2013  Resources  www.visa.com/merchantssurcharging www.visa.com/merchantssurcharging  www.mastercardmerchant.com www.mastercardmerchant.com  www.paymentcardsettlement.com www.paymentcardsettlement.com

14. Thank you Contact: DonnaE@gopai.com Merchant Surcharge Compliance 2013