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Some debit card networks are modifying their interchange policies for low-cost transactions to address merchant concerns about pricing. Will others follow?
Consumer comfort with using debit cards for a wide range of transactions continues to rise, Visa USA and MasterCard International report. But the fastest-growing growth sector for debit-small-ticket purchases-is far from reaching its potential.
"At the end of the day, the vast majority of (small-ticket) transactions are still conducted with cash," notes Les Riedl, president of the Atlantabased Speer amp; Associates consultancy.
To capture more of those transactions, at least one domestic PIN-debit network, Greenwood Village, Colo.-based First Data Corp.'s Star, is changing its interchange-rate structure. The network in May will move to a per-ticket-value approach from a monthly transaction volume-based structure in a bid to make PIN debit more attractive to quick-service restaurants, or QSRs, many of whose customers spend no more than $10 per visit, says Beth Lynn, First Data senior vice president of network administration.
"Our goal is to promote and expand...