STAR Interchange Fee Increase to Come in Stages

C oncord EFS, which operates three large ATM/POS networks under the STAR brand name, will implement changes in its planned interchange pricing structure in stages, the company announced.

In a move to create uniformity among its networks, STAR will put in place the previously announced POS interchange fee increases in two stages: Phase One, effective Jan. 1, 2002, will leave POS interchange fees at the current STAR network rates for all three networks, which includes STAR, MAC and Cash Station. In Phase Two, effective March 1, 2002, interchange rates will increase network-wide.

"With recent developments in the PIN-secured debit industry, we felt that we needed to step back and assess market conditions before moving ahead with an across-the-board increase," said STAR President Ronald V. Congemi. "The STAR network is committed to providing a consistent, uniform and balanced interchange pricing structure, and we believe that this phased approach achieves uniformity on our original schedule while continuing to effectively balance the interests of financial institutions and retail participants."

As the use of offline debit cards, or check cards, gains in popularity among consumers, costs to merchants are inching up across the board. Following Visa Interlink's interchange fee increase, Concord announced new STAR interchange fees, which are expected to top out at 34 cents per transaction for most merchants; grocers and supermarkets will pay a flat fee of 19 cents per transaction. Interlink raised its fee for each debit card transaction from 20 to 45 cents, with fees for grocers set at 22 cents.

On Oct. 13, Wal-Mart announced it will no longer accept Visa Interlink- serviced debit cards because of the 125 percent increase in transaction fees recently put in place. While Wal-Mart handles more than 350 million PIN-based debit transactions each year, less than 10 percent of its total debit card business is handled by Interlink. Retailers say the fee increases will result in higher prices for goods. The largest beneficiaries of the increases in interchange fees will be the banks that issue debit cards to consumers.