Friday, August 14, 2009

PIN Debit Pricing Quadruples in 10 Years

Network Rivalry Sparks 10-Year Quadrupling of PIN-Debit Pricing - Digital Transactions News



(August 14, 2009) Merchants increasingly are complaining about the rising cost of accepting PIN-debit transactions, once by far the cheapest payment they could process from any piece of plastic. Now, data compiled by the Federal Reserve Bank of Kansas City show why: the cost of accepting PIN-debit cards rose 305% between 1996 and 2007.

Using the Kansas City Fed’s numbers, Digital Transactions News has calculated that the average interchange cost for a small retailer on a $50 face-to-face purchase processed on a PIN-debit card with a major electronic funds transfer network logo in 1996 was 9.9 cents. By 2007, that same sale generated 40.1 cents in interchange. Digital Transactions News’s sister publication, Digital Transactions magazine, obtained the figures while compiling a story about PIN-debit interchange for its upcoming September issue. The Kansas City Fed’s data are based on information about interchange rates from 1996 into 2009 for the Star, Interlink, NYCE, Pulse, Accel/Exchange, Shazam, Jeanie, Networks, AFFN, and Maestro networks. Data for each network in every year were not available, especially for 2008 and 2009. The bank’s sources included the ATM&Debit News newsletter from SourceMedia Inc., Visa Inc. and MasterCard Inc.



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