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MasterCard to determine transaction-routing provisions on case-by-case basis

MasterCard is taking a different approach to the transaction-routing provisions of the Durbin Amendment than Visa, which is imposing new fees to retain debit card issuers.

MasterCard will instead handle the changes on a case-by-case basis.

New regulations ban existing arrangements in which issuers offer debit cards that route transactions only through affiliated networks, such as Visa for signature debit and the Visa-owned Interlink network for point-of-sale PIN debit, according to DigitalTransactions.net.

Visa executives said that they expect to lose volume and have imposed a new fixed network participation fee that will lower issuers’ cost to use its card. Financial analysts have speculated whether or not MasterCard, which holds a nine percent share of the U.S. PIN-debit market, would impose a similar fee.

MasterCard, however, said that it will work with issuers, merchant acquirers and merchants individually to assure their loyalty, DigitalTransactions.net reports.

“We still think our benefit comes from being flexible, deal by deal, and thoughtful, deal by deal,” MasterCard president and chief executive Ajay Banga said, according to DigitalTransactions.net.

MasterCard executives said that a Visa-like approach could potentially box MasterCard in.

“PIN-debit economics pre-Durbin were quite thin, and will become even thinner after paying routing incentives,” MasterCard U.S. market president Chris McWilton said, according to DigitalTransactions.net.

McWilton also said that MasterCard’s Maestro PIN-debit network is the only one with international utility.

MasterCard ended the second quarter on a high note with net revenues to $1.67 billion, up 22.1 percent from $1.37 billion in 2010’s second quarter. Not including acquisitions, its revenue growth would have been 19 percent.

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