PURCHASE, N.Y. -- Keeping its cards closer to its vest than Visa Inc., MasterCard International, however, has begun to offer some clues as to its strategy for dealing with debit-card interchange or "swipe" fees following the implementation of the Durbin Amendment reforms. "With the [Federal Reserve] issuing its final rule in late June, there's now greater clarity, and we're moving forward with our strategy, based on scenario planning and making the necessary operational changes," Chris McWilton, president of U.S. markets for MasterCard International, said last week during the [image-nocss] company's second-quarter 2011 earnings call.
"There's a lot of moving parts that need to be sorted through," he added.
San Francisco-based Visa is implementing a new merchant fee in the wake of Dodd-Frank financial reform and Durbin Amendment interchange-fee changes, CEO Joseph Saunders said during the company's fiscal third-quarter 2011 earnings conference call. He offered an update "on Visa's activities to adapt to the new United States regulatory environment" created by the legislation and the Federal Reserve's new debit rules, which cap swipe fees at 21 cents per transaction.
(Click here for previous CSP Daily News coverage. Andclick here for previous coverage of the swipe-fee issue.)
"We recently informed our issuers that we will implement a two-tiered interchange structure across both debit and prepaid products for issuers above and below the $10 billion asset level. We continue to work through the operational details of the structure and will be working with issuers and acquirers to implement the necessary changes prior to October 1" when the rules take effect, McWilton said.
"The battle lines over routing are still unfolding, being the smaller player in U.S. debit, MasterCard is in a completely different competitive situation," he continued. "Ours is one of potential upside, not the need to defend a large incumbent position. As a result, we will be looking at strategic surgical opportunities with issuers, acquirers and merchants to incent new PIN enablement on cards, as well as routing to our network."
He concluded, "Last September, at our Investor Day, I told you that I was confident that whatever the final outcome of the Durbin Amendment, it would present MasterCard with net opportunities to grow its U.S. debit business, and I continue to feel that way. As we only have about a 9% share of PIN debit transactions today, we continue to believe the exclusivity provisions of the Durbin Amendment providing net opportunity for us. The pending decisions by issuers, merchants and acquirers will influence routing and also ultimately determine how much opportunity we have."
Click hereto read the full transcript of Purchase, N.Y.-based MasterCard'sconference call at SeekingAlpha.com.
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