Star Systems, Inc., raised interchange rates at the beginning of February in order to provide financial institutions with better returns, according to Barbara Span, Vice President of brand marketing services.
"The change was part of Star's annual pricing review," Span told Transaction World. "Our goal ever since the merger of Star, MAC and Cash Station has been to provide a unified pricing structure across the country. As far as POS interchange, it's very consistent, with different tiers for grocery, QSR and other retailers. There's a new category for petroleum retailers due to their unique circumstances � preauthorization processing and lower ticket transactions.
"Star needs to provide competitive, balanced pricing for financial institutions, processors and consumers," Span adds.
Quick service restaurants saw no increase in the new pricing scheme, and continue to pay a flat rate of 12.5 cents per transaction. Others saw increases, however.
Most merchants in Group III (less than 5 million Star transactions per month) now pay .65 percent of the sale plus 12 cents, up to 45 cents, up from the previous rate of .55 percent, plus 12 cents, with a maximum of 34 cents. Group III supermarkets pay a flat 21 cents, up from 19 cents.
Most Group II merchants (5 million to 15 million transactions per month) now pay 0.6 percent plus 5 cents, with a maximum of 35 cents, up from 0.5 percent plus 4 cents, with a maximum of 20 cents. Group II supermarkets now pay a flat 17 cents, up from 14 cents.
Group I merchants now pay .55 percent play 4 cents, with a maximum of 30 cents, up from .45 percent, plus 3 cents, with a maximum of 20 cents.
The new rates for petroleum retailers are the same as those above, though the ceilings are a little lower. The maximums are 25 cents for Group 1, 30 cents for Group II and 40 cents for Group III.
In addition to the above interchange fees, Star also charges acquirers a 1-cent administrative fee per transaction.
Planet Payment announced in November that they and Fifth Third Bank Processing Solutions, the electronic transaction processing division of Fifth Third Bank have formed a strategic partnership to develop and deploy time-of-sale, or "dynamic", currency conversion services to Fifth Third's merchant customers, particularly those in the retail, hospitality and e-commerce sectors. Fifth Third is the industry's fifth largest merchant acquirer.
It is anticipated that the currency conversion service will be available towards the end of the first quarter 2004. Fifth Third Bank Processing Solutions will initially focus deployment of the currency conversion service to its leading retail merchant customers, from which there is a strong demand for the service.
"Dynamic currency conversion will be one of the most important new developments in the merchant acquiring business in 2004," said Randall L. Haaff, Senior Vice President, Fifth Third Bank. "Fifth Third Bank Processing Solutions processes transactions for some of the leading retailers in the country. These merchants have been seeking new ways to increase revenues while also enhancing the customer's shopping experience. Fifth Third Bank Processing Solutions' new dynamic currency conversion service enables our merchants to provide foreign customers a more personalized purchasing experience, while simultaneously earning additional revenue on each transaction."
A U.S. District Court judge recently upheld Visa USA Inc.'s decision to charge exit fees to debit card issuers who leave for MasterCard.
In her decision, U.S. District Judge Barbara Jones said she didn't have the jurisdiction to issue an injunction against Visa.
Mastercard had argued that they fee violated an Oct. 2001 ruling by Jones that would make it easier for American Express and other rivals to compete for banks that issue credit cards from Visa or MasterCard. That decision is being appealed.
MasterCard had argued that the fee was stifling competition, namely by charging a large fee that made it prohibitive for member banks to leave Visa for another card network. Visa argued that the fee wasn't prohibitive to competition nor a penalty to other member financial institution.
In a statement, MasterCard said it was pleased the judge didn't find the fee to be lawful, but disappointed she didn't issue an injunction.
"Even though Judge Jones chose not to issue the injunction at this time, it is clear that Visa's clearly anticompetitive rule is nothing more than a heavy- handed effort to block financial institutions from deciding to switch to MasterCard debit," said Noah Hanft, MasterCard's general counsel. "It's a thinly-veiled attempt to stifle issuers' freedom of choice, and cling to business they might otherwise lose."
"In a previous ruling, Judge Jones said that the intense competition between MasterCard and Visa has benefited consumers through lower prices and increased choice. Visa's rule cuts that competition off at the knees, and we intend to explore other legal options to have it rescinded," Hanft added.
Visa didn't respond beyond confirming the ruling.
Though economists and retail experts say that consumers are becoming smarter about waiting for sales during holiday shopping, reports from Visa in late November and early December still show that "Black Friday" and the remainder of the Thanksgiving weekend is still the focal point for a huge percentage of holiday purchases.
In the reports released in late November and early December, Visa showed that that total U.S. spending on Visa credit and debit cards for the Friday and Saturday following Thanksgiving increased 12 percent over the same period the previous year, rising to $6.5 billion.
Wal-Mart quit accepting MasterCard signature debit cards on Feb. 1, citing higher transaction fees when compared to other debit cards.
"As a result of the merchants' lawsuit settlement, MasterCard can no longer require acceptance of its signature debit card as a condition of accepting its credit card," says Mike Cook Wal-Mart's Vice President and Assistant Treasurer. "The fees charged by MasterCard for its signature debit are simply too high, which led us to eliminate this payment option rather than pass these costs on to our customers."
Cook adds that most customers who use the MasterCard signature debit card will still be able to use that card through PIN-based networks such as STAR, ACCEL, NYCE and AFFN. In addition, since MasterCard signature debit cards are tied to a bank account, customers have the option of writing a check.
Wal-Mart is continuing to accept MasterCard credit cards.
United Bank Card, Inc., a U.S. ISO, has begun distribution of Comstar Interactive Corp.'s groundbreaking CHARGE ANYwhere� wireless credit card processing solution via its nationwide network of sales representatives.
United Bank Card also will give customers using Lipman USA's Nurit� 3010 and Nurit� 8000 Portable Payment Solutions the option of routing their credit card and other wireless transactions through the Comstar Gateway via either of the nation's two largest wireless data services � Cingular Wireless' Mobitex network or the Motient network. The Comstar Gateway and Cingular Mobitex or Motient networks will connect United Bank Card customers with processors via a highly reliable and secure environment in which approvals are received by the user in less than 10 seconds.
"Our strategic relationship with an 'industry best' partner like United Bank Card will take the CHARGE ANYwhere brand to a new level in the marketplace," said J.D. Gardner, President and CEO of Comstar Interactive Corp. "We not only gained a significant new distribution channel but an extra measure of credibility by being aligned with a company that is held in high esteem within the industry."
In Late November, ERAS, an international bank software and solutions development company for the financial services industry, announced they were selected by CECOBAN, the official processing arm of the Central Bank of Mexico, to drive the first browser-based image clearing system for transmitting check items in Mexico. Using ERAS' iPOD software, over half a million checks per day are exchanged digitally nationwide.
In an effort to overcome logistics challenges, reduce costs and modernize the Mexican banking system, CECOBAN, a processing entity of 34 banks in Mexico, selected ERAS' iPOD and iPOD/Exchange modules. CECOBAN handles all capture, processing and balancing of transit items in Mexico.
"Check 21 is as relevant to Mexico as it is in the U.S.," said Emilio Luj�n, President of CECOBAN. "We are ahead of schedule in compliance, which gives us an edge in banking technology. CECOBAN has experienced the competitive advantage ERAS brings, and by streamlining operations, we are able to provide better customer service for all of our banks."
ERAS offers compatibility with all existing pertinent provisions of the Check 21 Act to all its customers in all its products. ERAS banks can clear with other image clearings institutions, reducing or completely eliminating intermediaries with direct digital compensations. ERAS is the image standard for CECOBAN's 34 banks in Mexico as of April 14, 2003.
Global Payments Inc. announced in November 2003, it has acquired 100 percent of the outstanding equity interests of Latin America Money Services, LLC and an operating subsidiary, DolEx Dollar Express, Inc. ("DolEx"). DolEx is a leading electronic money transfer firm operating in the U.S. to Latin America corridor.
Through approximately 550 retail branches in the U.S., DolEx serves a growing market of predominantly Latino customers who send money to beneficiaries in Latin America. Beneficiaries collect these funds from over 8,500 bank, exchange house, and retail settlement locations in Latin America.
Under the terms of the agreement, Global has paid approximately $190 million for DolEx in a combination of $65 million in cash and $125 million in debt. Concurrent with this acquisition, the company has changed the name of its "Funds Transfer" service offerings to "Money Transfer," under which DolEx revenue will be reported. For the year ended December 31, 2002, DolEx processed approximately 4.6 million electronic money transfer transactions with audited revenue of $69.9 million. More than 80 percent of DolEx transactions are made using over 300,000 proprietary Amigo Latino cards.
Global also announced they were raising their original fiscal 2004 annual diluted earnings per share guidance of $1.57 to $1.64 to a range of $1.65 to $1.72, reflecting growth of 15 percent to 20 percent versus normalized results of $1.43 in fiscal 2003 and were anticipating an operating income margin of 18.8 percent to 19.3 percent for fiscal 2004.
Corillian Corp., a provider of online banking solutions for financial institutions, and CashEdge, a provider of secure Online Money Movement and Advanced Account Aggregation platforms, announced in November 2003 the expansion of the companies' strategic partnership.
Corillian will integrate CashEdge's Online Money Movement, Inter-Institution Transfer, and Pay Anyone services into the industry-leading Corillian Voyager Internet banking platform; including applications for Consumer Banking, Small Business Banking, Corporate Cash Management and Credit Card Management.
Charter One, a $44 billion bank holding company headquartered in Cleveland, Ohio, will be the first customer to deliver the integrated online money movement capabilities to its retail and small business customers.
San Diego-based Secure Payment Systems (SPS), a national check services processor, announced in November 2003 that they had completed certification for the VeriFone Omni 3750 line of terminals for processing checks and gift cards. SPS is also pleased to announce that they have completed the certification of VeriFone's very first check imager the CR 1000.
Wincor Nixdorf recently made ProCash ATMs available in North America. The xe-series, the latest line of Wincor Nixdorf ProCash ATMs, offers increased levels of availability and performance and has been enhanced with technical product improvements.
The xe-series includes an improved cash dispenser with fewer belts and moving parts, which the manufacturer says should lead to fewer repairs. Additionally, the new note handling design provides increased processing speed and the ability to process up to 60 banknotes per transaction.
An additional new feature is the intelligent deposit concept that includes Wincor Nixdorf's check and deposit module, which allows up to 50 checks and 50 bills to be deposited in a single slot, all within the standard ATM footprint.
MasterCard International is now allowing customers in the U.S. to reload prepaid accounts using their MasterCard credit or debit card.
MasterCard rePower was successfully piloted in South Africa, where cardholders can purchase prepaid airtime for both mobile phones and payphones from three major mobile-network providers. J.P. Morgan Chase & Co. was the first bank in the U.S. to offer rePower to cardholders who buy prepaid airtime from Cingular Wireless.
RePower eventually will allow cardholders to reload other stored-value accounts, such as those linked to prepaid gift cards or transit cards.
Triton recently unveiled new wireless ATMs. Though some of the technology has been around for several years, the Triton ATMs use a more reliable communication infrastructure.
With monthly costs less than dial-up, transaction times comparable to leased line, and real-time monitoring capabilities, more wirless ATMs are expected to be deployed. A multitude of new ATM choices are becoming available for financial institutions that will reduce costs and enable them to place ATMs in lower transaction volume sites that do not justify the cost of a leased line ATM, according to Triton officials.
National pizza chain Domino's Pizza has again tapped Dallas-based Paymentech for payment processing at its more than 570 company-owned locations. Domino's takes in an estimated $50 million in bankcard volume annually from its company-owned stores.
The pizza chain will use its own point of sale system, as well as a wide variety of terminals. Dallas-based Paymentech is owned by Bank One Corp. and First Data Corp.
The SHAZAM network, one of the largest shared EFT networks in the industry, recently selected and is deploying Hypercom Corp.'s ICE Plus card payment terminals and technology in support of SHAZAM's new prepaid gift card program.
J.P. Morgan Chase & Co. recently announced an agreement to acquire Citicorp Electronic Financial Services Inc., a subsidiary of Citigroup for $380 million in cash.
CEFS is a leading provider of government issued benefits payments and prepaid stored value cards used by state and federal government agencies, as well as stored value services for private institutions. The acquisition further strengthens JPMorgan Chase's position as a leading provider of wholesale payment services.
Ezic, recently repackaged and repriced its Master Agent tools for managing the resale of payment processing services.
Ezic enables master agents (banks and large ISOs and MSPs) to direct, manage, and organize all of their accounts. With one click, Master Agents can access their entire sub-account hierarchy, giving them simple yet complete control over fraud controls, reporting and invoicing.
Every account comes with Fraud Barricade, which enables master agents to individually set their desired level of protection with controls for each of their agents and merchants, significantly reducing underwriting risk.
TransFirst Holdings Inc., a Dallas-based merchant processor, will be looking to make acquisitions in niche markets in 2004, particularly if prices come down, according to Andrew Rueff, Vice President for Mergers and Acquisitions.
"We have a fair amount of capital to pursue opportunities," Reuff told Transaction World. "We originally raised $135 million for capitalization in July of 2000, but used only $45 million. We feel like there are opportunities in emerging markets and in new payment arenas."
Specifically, TransFirst is eyeing acquisitions in health care, government, utilities and agent bank portfolios. Other enticing opportunities lie in bill payment and quick service restaurants, Rueff adds.
While quick service restaurants had been slow to accept payment cards, adoption ramped up quickly in 2003 in some urban markets, according to Rueff. However, many rural areas have yet to warm to the idea. Rueff likens the geographical pattern of acceptance to the acceptance of credit cards when they were first introduced.
Some of TransFirst acquisition plans may be put on hold until portfolio prices drop, Rueff says. "Prices right now are probably in the mid range to a little bit high right now."
Visa and MasterCard are looking at changing interchange rates again in the spring. According to a Visa memo that went out to members and has obtained by Transaction World, (excerpts appeared as a insert in the January 04 issue of TW) as a result of the Wal-Mart suit, Visa is "restructuring and modifying its offline debit and interchange reimbursement fees consistent [with the ruling] and to effectively position the rate structure to optimize the long-term value proposition for Visa members and merchants.
Effective January 31, 2004, Visa introduced new rates which the credit card company said would "lower fees from pre-settlement rates for all merchant categories, and create a performance-driven fee structure for supermarket and retail merchant segments based on volume, number of transactions, as well as fraud and chargeback levels."
Key elements of Visa's new debit interchange structure include:
Effective with the January 31, 2004 systems release, Visa is also creating two new interchange categories for both consumer debit and consumer credit � custom payment service for retail service stations and custom payment service for restaurants.
The consumer credit interchange interchange rate for both payment services will be equal to the current CPS retail rate of 1.43 percent plus 10 cents per transaction. For debit transactions the fees are being introduced at new lower levels along with all other debit interchange reimbursement fees.
Visa's rate structure has three thresholds determined by the number of transactions. Threshold I is 35 million transactions, Threshold II is 18 million and Threshold III is 6 million.
Merchants in these categories must also meet fraud (no more than .022 percent of sales) and chargebacks (no more than .018 percent of sales) in check in order to maintain their status and lower rates. Merchants in Threshold I pay .7 percent, plus 15 cents per transaction. The Threshold II rate is .083 percent, plus 15 cents, while the Threshold III rate is .95 percent plus 15 cents. Those merchants who fail to meet threshold requirements pay 1.05 percent plus 15 cents per transaction.
Though supermarkets pay the same rates, they pay no more than 35 cents per transaction.
The following are the rates for the new categories:
Transaction Network Services (TNS) announced in December 2003 that Cardtronics, the nation's largest independent owner/operator of ATMs, has selected TNS to provide ATM network connectivity. Cardtronics currently owns and/or manages more than 12,500 ATM machines.
Under the multi-year agreement, Cardtronics will use TNS Connect, a dedicated, private IP-based network, to support its nationwide ATM portfolio. TNS, one of the world's leading providers of fast, cost-effective data communications services for transaction-oriented applications, will be the exclusive communication provider for ATMs in 'The Georgia Dome' in Atlanta, Georgia.
Verus Financial Management, Inc. a Nashville-based payment processing company, announced it has purchased the assets of Global eTelecom, a Destin, Florida-based provider of advanced electronic check processing services.
Verus reports that it provides payment services to over 58,000 merchant locations in the United States and this is the fifth acquistion made by Verus since its inception in 2002.
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