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Fed Exempts Card Micropayments From Receipt Issuing Requirement

Posted On: 8/13/2007

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WASHINGTON, DC (August 2007) -- The Federal Reserve Board has voted to stop requiring merchants to provide receipts for debit-card purchases of less than $15. The new rule takes effect August 6.

Regulation E, which implements the Electronic Fund Transfer Act, had mandated the availability to consumers of receipts for transactions initiated at electronic terminals. The National Automatic Merchandising and the American Beverage Association argued for the change, as did Visa International.

The Board explained that the  ruling "is intended to facilitate the ability of consumers to use debit cards in retail environments where making receipts available may not be practical or cost-effective."

In written comments filed with the Federal Reserve early this year, NAMA had argued that the interest of consumers would not be compromised by the $15 paper-receipt exemption. The widespread availability and use of computers, cellphones and automated banking systems allow consumers to check their account balances at any hour of the day or night, obviating the need for a printed transaction record.

NAMA senior vice-president and chief counsel Thomas E. McMahon explained the importance of the ruling. "The cost to install a paper receipt printer in a vending machine -- about $670 -- was prohibitive and effectively denied our industry the debit card option," he noted. "The amendment will make the debit card option feasible for operators, and should provide consumers, who are increasingly comfortable using debit cards for low-priced purchases, with the convenience of debit card use in the vending channel."

He added that the rules governing receipt issuance in credit card transactions are made by the card associations. In general, merchants are not required to provide receipts for transactions under $25.

"This accomplishment is another example of NAMA's effectiveness in representing the vending industry before government, whether local, state or national," McMahon pointed out.

USA Technologies (Malvern, PA) welcomed the decision. The company, which produces the popular ePort system for cashless payments, believes that the Federal Reserve Board has removed a major barrier for the large-scale adoption of cashless acceptance in the multi-billon dollar-vending, kiosk, laundry and other small-ticket self-serve markets.

The ruling will benefit consumers by giving them the ability to enjoy the convenience of paying with debit at millions of new unattended point-of-sale (POS) locations, USAT explained.

"The decision to eliminate the need for merchants to provide consumers with receipts has significant implications for our business," said George Jensen, chairman and chief executive officer. "Of the $2.4 trillion spent with credit and debit cards in 2006, 36.2% or $868.8 billion was spent using debit cards. Debit purchases have steadily increased from approximately 9% in 1997, indicating a rapidly growing preference for debit."

USA Technologies worked closely with NAMA and the card companies to persuade the Federal Reserve to eliminate the need for a receipt for transactions under $15.

"Cashless has become the preferred method of payment in the U.S., and we believe the decision will lead to an acceleration in adoption of cashless technology, driving greater convenience for consumers and opening up new business opportunities for vending and the self-serve market," Jensen emphasized.

"It is a powerful incentive that we believe will be instrumental in encouraging global players to enter the cashless vending and self-serve market," he added. "USA Technologies is negotiating with major brands in the card, vending and POS industries, and the decision to eliminate the need for receipts for transactions under $15 removes a significant business obstacle."

USAT cited a report by Summit Research estimating that North American consumers spent more than $475 billion at self-checkout lanes, ticketing kiosks and other self-service POS locations in 2006. Expenditures at these types of self-service kiosks are expected to rise 33% in 2007.