Visa Launches Interlink With Aggressive Pricing

NEW YORK -- Visa U.S.A. on Thursday positioned its newly acquired Interlink point-of-sale network as a low-cost alternative for merchants who accept credit and debit cards.

In announcing a pricing structure for Interlink -- recently purchased from four large California banks -- Visa made it clear that retailers will pay less when they accept Interlink cards than when they take traditional Visa credit and debit cards.

Visa hopes to turn Interlink into the first nationwide point-of-sale system for direct debit cards. Such systems instantly debit checking accounts when consumers pay for items on their cards.

Aimed at High-Volume Merchants

Banks, thrifts, and card associations that join Interlink will market the system to supermarkets, gas stations, fast-food restaurants, and other high-volume merchants. The fees the merchants pay a bank to process card transactions are influenced by so-called interchange rates -- which the processors pay to the banks that issue the cards.

The pricing system unveiled by Interlink Thursday sets relatively low interchange rates, which in turns means low fees for retailers. Banks that process most Interlink transactions will pay the card-issuing bank 0.45% of each sale -- 80 basis points less than the average 1.25% they pay on Visa credit and debit card sales.

Banks that process transactions for supermarkets will pay a flat fee of 10 cents for each Interlink sale. The comparable fee for traditional Visa credit card and debit card sales is now 1.00% of each sale.

Simultaneous with its pricing announcement, Visa said that it is accepting membership applications. In addition to federally insured banks and thrifts, it is soliciting group memberships from bank trade groups and bank-owned regional automated teller machine networks.

When Visa's Interlink plan was first announced in June, many observers believed the system would exclude regional networks.

"We are doing what we can to provide a role for the regional networks," said Peter Gustafson, a senior vice president at Visa. "We welcome their participation."

Requests for Information

Mr. Gustafson said that more than 50 financial institutions have requested membership information.

More than 12, he added, are expected to apply before the end of the year.

Visa's rival, MasterCard International, plans to launch its own direct-debit system, known as Maestro, in conjunction with a consortium of regional networks. Maestro is expected to be available by the middle of next year.

Interlink currently has 12 million cardholders in the West. Visa said it will establish a 15-person board. Four of the seats will be filled by the network's founders -- BankAmerica Corp., First Interstate Bancorp, Security Pacific Corp., and Wells Fargo & Co. Three senior Visa executives also will be named directors.

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