Merchant acquisition and relationship management in the US impeded by new laws
Merchant attrition risk key challenge of 1099-K and Durbin Amendment regulations for merchant acquirers. October 05, 2011 | Tiah Wen LiIRS Form 1099-K was developed to ensure that small business owners who previously tried to run from declaring revenues they received via credit cards, debit cards, gift cards and services like Paypal will now need to do so.
The regulation is a last minute addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, developed to introduce competition, allowing merchants to select which debit network they process transactions over.
In a report by Aite Group detailing effects of the 1099-K regulations on merchant acquirers, respondents, consisting of 18 U.S. acquiring-industry stakeholders comprising C-level executives, senior vice presidents and vice presidents representing a mix from the top 10 and top 40 merchant acquires in the U.S. feel that regulations will have a fairly significant impact on business. The regulation, passed in 2008 will require merchant acquirers to report their merchants’ activity, detailing total payments received by merchants through the filing in of form 1099-K. This requirement came into place to ensure that small business owners who previously tried to run from declaring revenues they received via credit cards, debit cards, gift cards and services like Paypal will no longer be able to do so. Figure 1. Significance of the impact of the 1099-K requirements on business (18 respondents)
94% of respondents cited cleanup of databases to ensure that the Tax Identification Numbers (TINs) and legal entity names of merchants match those stored by the Internal Revenue Service (IRS) is a key challenge faced by merchant acquirers. A problem with... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Credit Risk, Regulation, Risk and RegulationCredit Risk,riskregulation,Risk and Regulation, Credit Risk,Regulation,Risk and Regulation, Keywords:Merchant Acquirers, Repricing Strategies, Durbin Amendment, 1099 K Merchant Acquirers, Repricing Strategies, Durbin Amendment, 1099 K
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