Visa Comments on its New Debit Interchange Rates

With its new interchange rates for its check cards, Visa USA Inc. says it is moving on a broad front to boost volume on signature-based debit, encourage usage at fast-food and other venues that have not historically accepted the card, and meet the needs of members and merchants generally. “We're trying to achieve quite a lot in quite a few merchant categories,” says William Sheedy, executive vice president for interchange at the card company. Visa last night released a new set of interchange rates on its signature-debit product, effective Jan. 31, that cut transaction costs across the board and aim to encourage transactions in emerging markets where Visa sees high potential. While industry observers have pointed to efforts by Visa to negotiate specialized, reduced pricing for specific large retail chains that generate a high volume of debit volume, Sheedy says he can't comment on any such discussions with particular merchants or members. He adds, though, that as a general rule Visa historically has sat down with its members to discuss merchant-acceptance terms, and has been willing to consider “customized” terms where they gave promise of benefiting members and merchants. “We're businesspeople, we'll listen to those opportunities,” he says. The new rates, he says, “will apply to the vast majority of members and merchants.” Interchange rates are paid by acquirers in the card systems and passed on to merchants. Visa's rates now provide pricing aimed specifically at merchant segments where it wants to increase check card transactions and dollar volume. Automated bill payment, for example, will carry interchange of 0.80% plus 25 cents under the new structure, compared to 1.43% plus a nickel under the rates in effect before the spring settlement of the so-called Wal-Mart class-action suit forced the introduction in August of interim rates. By imposing in many cases lower ad valorum rates and higher fixed fees, the new pricing favors higher average tickets. “We're seeing above-average growth in emerging markets, and we feel we can supercharge that growth,” says Sheedy. “We're looking forward to getting past the (Wal-Mart) settlement. This (new rate structure) will position Visa and its members to succeed.”