Boston, September 15, 2011 – A new report from Aite Group provides insight into how a section of the Housing and Economic Recovery Act—form 1099-K—will impact merchant acquiring. Based on January and August 2011 Aite Group interviews with 18 executives at acquiring organizations, the report assesses the business challenges and risks, associated costs, and ways in which the merchant acquiring industry plans to recoup costs and grow revenue as a result of form 1099-K.
In order to reduce the tax gap, the IRS now requires merchant acquirers to report their merchants’ total payments. As a result, merchant acquirers are spending a lot of time, effort, and resources trying to comply with this law. Aite Group estimates that the merchant acquiring industry will spend a total of US$125 million on implementations related to form 1099-K, but the industry is also positioning itself to recoup those costs and even increase revenue.
“In spite of the challenges caused by form 1099-K, Aite Group see an incredible opportunity for ISOs and acquirers to monetize this requirement,” says Adil Moussa, senior analyst with Aite Group and co-author of this report. “Partially because of the expenses incurred, ISOs and merchant acquirers will be able to justify increasing their prices or charging for compliance.”
This 17-page Impact Note contains 11 figures. Clients of Aite Group's Retail Banking service can download the report by clicking on the icon to the right.