Card Payment Pre-Certification Saves Money for Merchants & Acquirers

As we discussed in Part 1 of this series, How To Streamline the Payment Card Certification Process, credit and debit cards dominate the retail payment domain in the US, accounting for more than 90% of retail purchase transactions during 2023.

As significant as this number sounds, many countries across the globe, such as Denmark, Norway, Sweden, and New Zealand have an even higher percentage of electronic transactions.

In other recent blogs, we highlighted how the speed, convenience, and security of digital payments have combined to spur their widespread adoption, significantly replacing both cash and checks at the point of sale.

Card Payments Bring Many Benefits to Merchants, But There Is a Cost

Merchants clearly benefit by accepting credit and debit payments. According to a recent Forbes article, consumers in the US are twice as likely to spend more money when using a card than with cash. In 2023 alone, there were more than 150 billion credit and debit purchase transactions in America, totaling more than $11 trillion.

However, card acceptance is not free and the costs can be significant.

For example, the interchange fees - the tariff merchants pay to accept branded cards from American Express, Discover, Mastercard, and Visa - typically range from 1.5% to 3.5% of the value of each transaction.

According to the Merchants Payments Coalition (MPC) the total interchange (swipe fees) for credit and debit transactions in the US, topped $172 billion in 2023, compared to $160 billion in 2022. Of that figure, more than $132 billion in swipe fees were from debit and credit cards bearing the Mastercard or Visa logos.

And while the card swipe fees are a major expense item for merchants, there are also costs associated with supporting the in-store and back office systems required to accept, authorize, and process electronic transactions, along with the ongoing requirement to stay current with ever-changing card scheme rules, regulations, and specifications.

These “mandates” are often driven by Mastercard, and Visa, but typically ripple across the payment industry, eventually finding their way into the specifications published by other card brands, regional debit networks, merchant processors, device vendors, and software providers in an ongoing cycle of review, analysis, testing, and certification.

While the payment certification process can be cumbersome, time-consuming, and expensive, it is both necessary and important, helping merchants and acquirers ensure that they are processing transactions correctly in order to minimize interchange fees and reduce the probability of disputes and chargebacks, which can add even more cost and complexity.

How to Save Time and Money on the Payment Card Certification Process

Historically, payment card certification has been a slow and inefficient process, sometimes taking weeks or months to complete. Given that many large retailers and most merchant acquirers interface with multiple networks, this amount of overhead is simply not cost-effective or practical and requires a new approach.

Paragon’s Web FASTest solution is a modern, web-based testing platform that provides any organization that acquires retail payment transactions with the features, functionality, and flexibility they need to take total control of their testing environment and streamline the certification process.

Paragon Application Systems takes on the important role of researching the card scheme specifications when new mandates are published, analyzing the impacts on both acquirers and issuers, making the necessary updates to our products, and then providing new releases to our clients.

By leveraging our industry expertise and experience working with many of the largest acquirers and processors, our clients can minimize the amount of time and effort required to analyze the impact of new specifications on their business and maximize the amount of pre-certification activities they can accomplish before having to schedule actual certification time with a card brand, network or processing partner.

Paragon is unique in that when we provide updated specifications to our clients, we include support for both the issuer and acquirer processing components. This means that a merchant or acquirer can use Web FASTest to act as an issuer and respond to any messages or transactions sent to it.

Web FASTest can also act as a “Virtual Host” that is available to facilitate anytime, anywhere pre-certification testing. This capability allows merchants and acquirers to test “sunny day” processing - that is when the Virtual Host responds correctly according to the specification being used - but can also be configured to support any negative testing scenarios that the acquirer wants to set up.

The combination of updated and accurate specification data, along with 24/7 self-testing capabilities means that developers, testers, and QA resources can get both the tools and time they need to ensure all internal testing is completed successfully before initiating the formal network certification process.

Paragon Web FASTest also enables any organization to create and manage specific certification-related projects that contain the scripts and associated data needed to execute tests, as well as track project progress to completion. Built-in automation enables a “test all” capability, meaning projects can be initiated and completed with a single click.

The payment card certification process continues to play an important and necessary role in protecting the safety and security of the retail payment industry, including merchants, acquirers, and processors. However, many organizations still find the certification process to be cumbersome, time-consuming, and expensive.

Tools like Web FASTest provide any payment industry participant with an opportunity to improve the speed, accuracy, and efficiency of their testing capabilities and “pre-certify” with networks, card schemes, and processing partners to significantly reduce the time and cost involved with the actual certification process.

Interested in learning more about how innovative testing capabilities like the Web FASTest Virtual Host can help reduce some of the overhead associated with your ongoing payment card certification efforts? To find out more, get in touch with our team of specialists today.