About the author : Carrington

I'm a payments geek and payroll expert living in Apex, NC serving American entrepreneurs with all things electronic payments. I live at the bottom of all the rabbit holes so you don't have to. Doesn't your business deserve an expert?

You may have seen a new line item on your merchant processing statement – Visa EMV Excessive Fallback Fee. Yes, it is a Visa imposed fee and no, that doesn’t mean that what you see on your statement is a passthrough cost.

First, let’s look at the rule and second, we’ll take a stab at describing what it isn’t.

Understanding Visa EMV Excessive Fallback Fee

Visa introduced this transaction fee way back in 2019 as a part of a pretty sweeping adjustment to several interchange fee structures from the two biggest card brands – Visa and MasterCard (no collusion though, definitely not). With those fee adjustments due to take hold in April and October of 2021, Visa wisely put their greed on hold in light of this little thing called Covid-19. I’m going to assume it was pretty tough though, because it’s estimated that this fee restructuring will net Visa an additional $768 million per year (Source Digital Transactions).

The Visa EMV Excessive Fallback Fee penalizes merchants who swipe a chip card, if those swiped chip cards represent 10% or more of their transactional volume. If you are using a legacy software like an Aloha or Micros and are swiping cards that have EMV chips on them (pretty much every card), then you’re going to get spanked. If your equipment is malfunctioning and you attempt to chip the card but your reader isn’t working and you then have to swipe the card, you’re going to get spanked (subject to the 10% rule that is).

Visa EMV Excessive Fallback Fee is $0.10 per item

For each item, if your “fallback” sales exceed 10% or more of your total number of sales, you’ll pay an extra $0.10 per transaction.

As always with the payments industry, those bad apples are showing their bruises and taking advantage of this fee change to really put the screws to their clients.

Here is what the Visa EMV Excessive Fallback Fee is NOT:

Heartland Non-EMV Assessment Fee or Non-EMV Program Fee

Heartland AKA Global is the unofficial king, queen, prince, and robber baron of bullshit fees. They have been ramming this non-EMV fee down their merchants’ throats since May of 2021 and show no signs of stopping. If you’re with Heartland (wake up!) and your statement looked like this, the Visa EMV Excessive Fallback Fee would cost you an EXTRA $364.90, that is if Global passes the fee on at cost.

How you can avoid the Visa EMV Excessive Fallback Fee

This is where it gets tricky.

First, let’s hit the easy one – your chip reader isn’t working or it’s working intermittently.

If you have faulty equipment, work with your processor or (shameless plug) get a new processor who will help you get working equipment. In the meantime, for those transactions that aren’t going through and you’re thinking it will be more than 10%, then you may want to just hand key them. I know that is a pain, but it’s up to you on how much $0.10 means to you (assuming your processor doesn’t mark this item up that is).

Second, your point of sale system doesn’t have EMV capability.

This is the tough one. There are a great many point of sale systems (Aloha, Micros, TouchBistro, Mojo, and many others) that either aren’t EMV capable or it is VERY expensive to convert to EMV. If you’re using one of the older iPad or tablet based systems – you have no excuse. Get with someone who knows what they’re talking about (ah-hem) and upgrade – like NOW.

If you’re NOT a restaurant owner or a retailer who leverages a POS system, you may be thinking – why not switch to one that does?

Because it’s a pain in the ass – a potentially expensive one at that.

It means a new set of hardware, training staff, making sure menus are set up properly and that kitchen printers and bar printers spit out what they’re supposed to spit out. It means connecting online shopping, curbside, and all the other myriad things that make a business work in 2021.

This is why Toast is eating Aloha’s lunch.

They have a great outside sales force and a solid product. They also know that restaurant owners are the worst combination of busy and lazy so they glaze over details – trading the saving of a few bucks now for overpaying for years into the future while receiving almost zero service.

Oh, and wait until they need to justify their turbo unicorn-squatch status when they go public at the ungodly sum of $16 billion (Source).

Here’s a cheat sheet of elevating your old POS:

  • Aloha, Micros, PosiTouch, Digital Dining, Dinerware, Restaurant Pro, FoodTec, HarborTouch – basically anything with a “computer” and a back office server – you need to click here for the best local server restaurant pos on the market. It also coincidentally has the best support I’ve ever seen (everyone who works there has worked in restaurants) and your upfront cost is going to be less than $4k for 3 stations.

    Not only does this system provide better service than your legacy system, but upgrades are free, it offers integrated online ordering and is fully cash discount compliant. ALSO IT LOOKS AND FEELS EXACTLY LIKE ALOHA. You will kick yourself for not making the move faster.

  • TouchBistro, Revel, Lavu, MobileBytes, SalesVu, etc – these guys were great when iOS systems first came out. They’ve been eclipsed by newer companies that are committed to restaurant technology, not monthly fees they can charge restaurants (that and MobileBytes was purchased by Heartland – yikes!). For these you need to click here for the best tablet point of sale system – retail or restaurant.

I owned a restaurant for 4 years. It was one of the hardest things I ever did and I did it before all the Covid shenanigans started. I learned a ton about what to expect from a point of sale, from a processor, and from a vendor. I would be happy to chat with you about your business and whether or not it’s a fit, I’ll do my damnedest to help.

Let’s Chat

About the author : Carrington

I'm a payments geek and payroll expert living in Apex, NC serving American entrepreneurs with all things electronic payments. I live at the bottom of all the rabbit holes so you don't have to. Doesn't your business deserve an expert?

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