ATM fallback fees, and how to prevent them
ATTENTION ALL ATM OWNERS
Avoid fallback transaction fees from Mastercard, Visa and Pulse networks on the FIS platform.
EMV Fee History: With the introduction to “chip” cards within the last few years, Networks have been pushing consumers towards using these cards, and these cards alone. If a chip is not read or if there is an issue with the card reader on the ATM, and the transaction reverts to the strip on the card, this is considered a fallback transaction. Because Networks are pushing for chip only transactions, they began charging fees for these fallback transactions.
Over the last couple years, networks have passed those fees onto Payment Alliance International (PAI), which is your ATM processor. PAI has paid these fees for ATM owners. However, there are actions ATM owners can take to avoid fees on their machines. To encourage those changes and avoid thousands of dollars in fees, PAI has chosen to pass on these Network fees onto customers with the applicable percentages (see percentages below per Network).
Our stance on passing these fees on has changed, as we’ve tried to find the best way to handle these fees and encourage ATM owners to make the necessary changes at their ATMs to avoid fees.
Pulse Fees will now be passed on, along with the Mastercard and Visa Fees.
MasterCard Fee Structure (Since March 1, 2020)
Any TID over a 3% fallback rate shares in the fallback penalty fee, currently $40,000/month.
This is calculated by the following formula. Total fee/# of all terminals with >3% Fallback
Example: $40,000 Total Fee/ 14,652 (# of terminals) = $2.73/terminal
Visa Fee Structure (Since March 1, 2020) Visa = International Cards ONLY
Any TID over a 2.5% fallback rate shares in the fallback penalty fee.
$1 fee per fallback transaction
Example: 5 EMV fallback transactions, on 1 terminal, for 1 month (5*1*1)= $1
Pulse Fee Structure (Starting February 1, 2021)
Any TID over a 1% fallback rate shares in the fallback penalty fee, currently $10,000/month.
Total fee/# of all terminals with >1% Fallback
Example: $10,000 Total Fee/ 18,000 (# of terminals) = $.55/terminal
Any TID that is at 100% fallback will incur a $19.99 fee.
What PAI is doing and how you can avoid fallback transactions:
PAI works to eliminate fees and ensure the highest amount of interchange is paid to all partners. We’ll continue to optimize interchange while pushing back on any other fees passed through by any network. To avoid fallback fees as a company, we need to be below 3% for MasterCard, 2.5% for Visa, and 1% for Pulse. As a result of the efforts by our partners and PAI, our overall fallback rates are dropping. This means that the 3%, 2.5% and 1% thresholds are attainable.
We recommend that ATM owners do the following to eliminate fallback transactions:
Ensure your ATM is fully updated with the correct software and settings. Contact our office at 855-PMG-ATMS for assistance or to review your current software version, and update, if necessary.
Clean the card reader monthly. An easy way to clean your card reader is to purchase card reader cleaners. Your local office store may have them, or you can order them through Amazon. The “waffle” card reader cleaners seem to work the best.
Monitor your ATM fleet’s fallback rates using the FIS EMV Fallback reports in PAI Reports. To run this report, login into PAI Reports and click on the green square in the top-left corner of the screen. On the search line, type in “Network Fallbacks. Select Network Fallbacks, and the run the report. This report is a monthly breakdown and will show the fallback rate for all Mastercard and Pulse transactions.