Thursday, May 29, 2008

NYCE Trend Developing Towards More PIN Debit Use

Typical debit card transaction machine, branded to McDonalds.Image via Wikipedia
According to a press release from Acxsys and NYCE, during the four month period from December through March 2008, Canadian shoppers spent record amounts and made significantly more cross-border purchases in the US than last year.

U.S. retailers experienced even more value from accepting Canadian PIN debit cards during the holiday, spring break and snowbird season through the Cross-Border Debit service. The service is offered through an alliance between NYCE Payments Network and Acxsys Corporation.

NYCE Payments Network, LLC, is a leading U.S. debit card payments network and a Metavante company. Metavante is a leading provider of banking and payments technology. Acxsys Corporation is the architect of the national INTERAC debit service in Canada.

During the period from December 2007 through March 2008, Canadian consumers spent an average of more than $68 per Cross-Border Debit transaction—a figure that is 45 percent more than the average U.S. debit purchase during the same months. Since the service launch, the Canadian average has outpaced the U.S. average by 33 percent.

“The higher per-transaction average, combined with the lower cost to process PIN debit transactions versus credit, saves our retailers money while giving Canadian consumers instant access to funds that reside in their Canadian bank accounts,” said Steve Rathgaber, president and chief operating officer at NYCE.

“As they do at home, Canadians are choosing PIN debit at all types of retailers that accept NYCE, giving NYCE a unique value proposition to offer our participants.”

While the three-year-old program continues to enjoy steady growth overall, transaction numbers increased dramatically for the November and December shopping season last year in the states of New York and Washington. The combined transaction number for these states jumped 94 percent. Growth remained strong in the months following this period, with those same states logging 92 and 102 percent increases respectively in March 2008 transactions alone over the past year.

“Canadians are among the highest users of debit compared to other countries around the world, so it’s not surprising that Canadians are increasingly choosing debit in the United States as their preferred payment method,” said Tina Romano, public relations manager, Acxsys Corporation.

NYCE is the first and only U.S. payments network to enable widespread PIN debit access at the point of sale for purchases initiated with debit cards issued by participating Canadian financial institutions.

MasterCard Investment Community Meeting

If you're interested in taking a look at the slide presentation from this morning's MasterCard Investment Community Meeting (it's in PDF format), simply click the link below:

On Global POS Interchange Fees

Image from a GAO report explaining how the interchange fee works.Image via Wikipedia
Global POS interchange fees increased 140% between 2000 and 2006, to $64 billion (€48 billion). This massive growth in POS interchange fees was mainly fuelled by a phenomenal increase in payment card purchase expenditure worldwide and increased interchange rates in the USA, and occurred despite reduced interchange rates in Australia, Europe and elsewhere.

A new study by Retail Banking Research (RBR) analyses the evolving and increasingly complex landscape for POS interchange fees. It forecasts major changes to POS interchange fee arrangements and fee levels around the world. The study argues that the future for POS interchange fees is uncertain, for five main reasons:

• Competition and other public authority interest in POS interchange fees is continually growing
• Authorities are taking increasingly tough stances on multilateral interchange fee (MIF) arrangements
• The European Commission’s actions and findings – such as the December 2007 ruling that MasterCard’s MIFs are restrictive business practices – influence those of National Competition Authorities
• Pressure from merchants and retailer associations towards reduced interchange fees (or even their removal) is increasing
• There is political and regulatory pressure to converge and standardise fees in the SEPA area.

The study predicts a decline in the levels of POS interchange fees, which in association with changes to interchange rate structures and payment scheme rules will have major strategic implications for payment card organisations, issuers, acquirers, merchants and consumers.

"The Future for POS Interchange Fees" describes the background to the current controversy and provides an independent analysis of recent actions by competition and other public authorities. It looks at trends in interchange rates worldwide, and makes strategic predictions on the future of POS interchange fees and related matters such as MasterCard and Visa's honour-all-cards and (no) price discrimination rules.

For more information, interested parties should visit:

Notes to editors

Retail Banking Research is a strategic research and consulting firm with three decades of experience in retail banking, banking automation and payment systems. RBR assists its clients by providing independent advice and intelligence through published reports, consulting and newsletters. RBR is recognised as the leading provider of premium research on payment cards and ATMs. Banking Automation Bulletin, a research newsletter founded in 1979, is published once a month by RBR.

The information and data within this press release are the copyright of RBR, and may only be quoted with appropriate attribution to RBR. The information is provided free of charge and may not be resold to third parties.

For more information about this report, please visit or email Rob Walker (

Payments News Weekly Wrap

The Weekly Wrap is compiled by Glenbrook's "Payments News" blog.

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