Concord EFS Inc.'s Star network, which is being integrated by its expectant corporate parent, First Data Corp., plans to raise interchange rates PIN debit transactions Feb. 1.
To offset the interchange hike, the electronic funds transfer network will reduce annual membership fees and switch fees, said Star spokeswoman Barbara Span.
Ms. Span said that Concord, of Memphis, has been working to put its three legacy networks - Star, MAC, and Cash Station - under the Star brand, and an important goal has been to create a single annual membership fee. Ms. Span said the new fee schedule has moved the network closer to that goal.
(First Data's deal to buy Concord EFS for just under $7 billion won approval from the U.S. Justice Department on Dec. 15 after the Denver company agreed in a settlement to divest its majority interest in the NYCE network. See related
"Financial institutions," Ms. Span said, "are benefiting from increased interchange fee structure in some areas." The increases "strive to balance the needs of all participants - be they financial institutions, retailers, processors and consumers - while also enabling us to be competitive in the marketplace."
Interchange is the fee that flows from the merchant to the card issuer when a transaction is conducted with a debit or credit card.
Star has also established an interchange category exclusively for petroleum retailers. Those retailers "have a distinctly unique set of circumstances, including preauthorization conducted for gas purchases, as well as a low average ticket," Ms. Span said. Low-ticket is generally in the category sometimes referred to as small-value payments - $20 to $25 or less, she said.
Star, which is operated out of Maitland, Fla., tiers its rates by monthly volume. Group I has merchants that conduct more than 15 million transactions a month, Group II five million to 15 million, and Group III less than five million.
Most Group I merchants will pay 0.55% plus 4 cents per transaction, capped at 30 cents, up from the current rate of 0.45% plus 3 cents, capped at 20 cents. Group I supermarkets will pay a flat 15 cents, versus 12.5 cents now. Quick-service restaurants, a relatively new category, will continue to pay a flat fee of 12.5 cents per transaction across all three tiers.
Petroleum merchants will pay the same rates as other merchants but will have lower caps. For petroleum retailers in Group I the cap is 25 cents.
Most Group II merchants will pay 0.6% plus 5 cents, capped at 35 cents, versus the current 0.5% plus 4 cents, capped at 20 cents. Group II supermarkets will pay a flat 17 cents, up 3 cents. For petroleum merchants, in Group II the cap will be 30 cents.
Most merchants in Group III will pay 0.65% plus 12 cents, capped at 45 cents, versus the current 0.55% plus 12 cents, capped at 34 cents. Group III supermarkets will pay a flat 21 cents, up from 19 cents. For petroleum merchants in Group III the cap will be 40 cents.
