Interlink Overtakes Star as Top Network

  It is perhaps a sign of the times. An EFT network that only switches PIN-based point-of-sale debit transactions is now the nation's largest network. And it achieves that status even after other networks include their in-network ATM transactions.
  Visa USA's Interlink is now the largest network in the U.S., according to March data collected for the 2007 edition of the ATM&Debit News EFT Data Book, which will be published Sept. 21.
  In achieving the top EFT network rank, Interlink surpasses First Data Corp.'s Star. In March, Interlink switched 330.8 million transactions, up 38.6% from 238.6 million in March 2005. Star in March switched 310.2 million in-network transactions, both ATM transactions and PIN-based purchases, which was up 5.6% from 293.7 million a year earlier.
  In-network switch volume among all EFT networks in March grew 17%, to 1.07 billion transactions from 912.9 million in March 2005. Total in-network PIN-based POS volume among all networks in March reached 840.2 million, up 22,8% from 684.2 million a year earlier.
  The growth of Interlink, which is now used by most top-10 debit card issuers as a primary POS-debit network, has been going on for some years, as Visa took several major issuers from Star. These institutions include Wells Fargo & Co., Bank of America, Wachovia and, most recently, JPMorgan Chase & Co.'s cards that were issued by Bank One before Chase acquired that institution in 2004.
  Last year, Interlink surpassed Star as the largest PIN-debit POS network.
  But the designation of a network that only switches POS transactions as the top network is a watershed event for the PIN-debit industry, says Lee Manfred, analyst for Annapolis Consulting.
  Interlink's rise to the top shows how consumer use of PIN-debit cards at POS locations is supplanting the use of checks and cash, much of which is accessed via ATM withdrawals. Indeed, the POS-debit growth rate far exceeds growth in consumer purchase activity as a whole, Manfred notes.
  Because of its capture of major issuers in recent years, Interlink is now the primary beneficiary of consumers' tilt toward using PIN debit cards instead of cash in several merchant categories, says Manfred. "That [PIN-debit] growth rate reflects issuer conversions" and not necessarily increases in purchases in general, he says. "Visa was very successful in executing its strategy in targeting the largest issuers with a single-brand strategy." Issuers that switched to using Interlink typically also issue Visa's signature-debit check card. Many of them also now use Visa's Plus international ATM network.
  Jeff Sachs, Visa senior vice president for consumer debit services, says he expects Interlink to keep growing, but at a slower pace than in recent years. "We expect it to be higher than (average) industry growth," Sachs says. "But we don't expect it to be the growth of the past."
  For its part, Star this year seemed to stop some of the bleeding of transaction volume to Interlink. Between March 2004 and March 2005, Star's volume dropped 9.2% and barely maintained its status as the top EFT network. As of March, Star gained about 8.5% in PIN-debit POS volume, although it lost about 3.6% in ATM volume.
  But that loss still was lower than average losses in ATM transaction volume year over year, according to the Data Book.
  Star's reduction in network ATM volume follows a national trend. Total ATM transactions, counting both network volume and so-called on-us volume at bank-owned ATMs, fell by about 4%, according to the Data Book.
  The 22.8% growth in PIN-debit POS volume, while leading among all other payment card types in terms of growth rates, actually represents a decline from past PIN-debit growth. In 2005, PIN-based POS debit volume grew 29.3%, according to last year's Data Book.
  Dave Schneider, president of the Houston-based Pulse EFT network, ranked third among EFT networks, calls the current PIN-debit numbers in the Data Book "an accurate reflection" of PIN-debit trends. He suggests that, while PIN-debit growth appears to be slowing, it has become a key replacement in the use of cash for purchases.
  "People are relying less on cash and more on cards in their daily lives," says Schneider.
  (c) 2006 Cards&Payments and SourceMedia, Inc. All Rights Reserved.
  http://www.cardforum.com http://www.sourcemedia.com