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VISA’s Chief Financial Officer, Byron H. Pollitt reported Wednesday that Interlink, VISA’s PIN-debit network experienced a 54% decrease in payment volume when compared to a year earlier. This plunge is attributed to the Durbin Amendment’s provision that required issuers to add access to more than one PIN network. Before Durbin, debit cards bearing the VISA logo were required to go through Interlink.
On the surface, removing this exclusive payment network arrangement would seem to be a good thing for merchants and consumers. Competition should stimulate lower transaction fees for debit cards now that merchants will have a choice, but it seems that the list of eligible networks is still relatively small. Further, while the merchants have more transaction-routing choices, it will take time to educate merchants on how to use this routing option. Plus the number of available networks is still relatively small.
Networks that might be picking up VISA’s volume would include First Data Corp and their Star networks, Discover Financier’s Pulse and Fidelity National Information Services’ NYCE. However analysts are speculating that the big winner for the early adopters of debit card routing is MAESTRO, which is owned by VISA’s big rival MasterCard. (see below, MasterCard's PIN Debit Volume Tripled.) MasterCard will announce earnings on August 1, so we will want to watch and see if there is a corresponding bump in the MasterCard PIN-debit card volumes.
VISA continues to beef up product and pricing initiatives that are designed to stop the further deterioration of PIN debit volumes which may in fact mean that the Durbin amendment is working.
Source: Digital Transactions
MasterCard’s PIN authorized debit transactions rose threefold in the first quarter of 2012, giving the company a huge 20% market share. (See
Debit Card Growth Fuels MasterCard’s Q1 Results) This jump was primarily due to the implementation of the Durbin amendment to the Dodd-Frank bill, which requires banks with more than $10 billion in assets to use separate payment processing networks for signature authorized and PIN authorized debit card transactions.
