NYCE has joined the price jockeying among electronic funds transfer networks, delaying a hike in the interchange fees that retailers pay to banks and adding discounts for big merchants.
The fees, which were to rise last Monday, will now do so May 1, said the networks executive director, Susan Zawodniak, a vice president at NYCE Corp., which is mostly owned by First Data Corp.
NYCE point of sale interchange fees are now 45 basis points of the purchase amount, with an 8.5-cent floor and a 12.5-cent cap.
As previously announced, standard interchange fees for merchants that do not qualify for the discount tier will rise to 19 cents per transaction for supermarkets and 55 basis points plus 12 cents, with a 34-cent cap, for other merchants.
The discount-tier merchants are supermarkets with $10 billion or more of domestic gross retail sales and other retailers with $15 billion or more. The new discount fees will be 14 cents per transaction for the supermarkets and 50 basis points plus 5 cents, with a 22-cent cap, for the others.
Visa U.S.A. started the flurry in POS interchange fees last year when it said it would raise those of its PIN debit network, Interlink.
Merchant dissatisfaction led Visa to postpone that hike and then set up a three-tier discount structure. But some companies oil companies in particular complained about being denied the better rates. BP West Coast Products LLC, a unit of BP PLC in London, filed an antitrust lawsuit over the exclusion of its Arco gas stations, which produce many Interlink transactions.
NYCEs Ms. Zawodniak said all oil companies qualify for its discount tier, and none will be excluded. Were not excluding by type of retailer, she said.
The May 1 figures represent a balancing act, Ms. Zawodniak said. We have been contracting both retailers and financial institutions, and the reaction has been positive, she said. We think weve struck the appropriate balance.
The discount is based on gross sales rather than payments through NYCE because merchants generally have no say in which network a transaction uses, Ms. Zawodniak said; that is determined by the financial institution. Gross retail sales indicate the potential amount of volume that any retailer could deliver.
NYCEs increases in automated teller machine interchange fees took effect as scheduled Monday. The fees rose to 55 cents for an off-premises ATM withdrawal, $2 for deposit interchange at an on-premises or bank ATM, and $2.25 cents if the terminal is off-premises. Issuing banks pay the money to ATM owners for letting a customer use a machine.
Scott Strumello, an associate with Auriemma Consulting Group in Westbury, N.Y., which specializes in the payment card industry, said the interchange pricing changes are more evolution than revolution. My impression is this is just another adjustment and there will probably be more to come, he said.
I dont know if [pricing] is a science, Mr. Strumello said. A lot of it has been trial and error on the credit side thats been true.
