A leading vending-machine payments processor company has warned that new Visa interchange schedules will result in a 247 percent increase in average costs.
The Malvern, Pa.-based USA Technologies operates a network of vending machines and other unattended locations with 119,000 connections for 1,000-plus clients that accept credit and debit card payments wirelessly, according to DigitalTransactions.net.
During the last fiscal year, 82 percent of the transactions in USA Technologies network were small tickets on debit cards, while 70 percent of the debit transactions were from Visa and MasterCard.
USA Technologies said that the new rate will impact 57 percent of its transactions.
“If we are not able to pass along such interchange fee increase to our customers or take steps to recover these increased fees, our gross profit from license and transaction fee revenues and our financial performance would be materially adversely affected,” tUSA Technologies’s annual report says, DigitalTransactions.net reports.
Visa is adapting to the Durbin Amendment’s interchange cap of 21 cents plus 0.05 percent, as well as another one cent pending for fraud control, for debit card transactions from card issuers who have more than $10 billion in assets.
The cap is expected to reduce the average interchange by about 45 percent for the issuers.
The new rate set by Visa will replace each network’s former small-ticket consumer debit interchange rate of 1.55 percent plus four cents, according to DigitalTransactions.net.
On Wednesday, USA Technologies' share price slid 21 percent.
According to financial experts, Redbox will likely get hit with higher interchange on small transactions as well because it only charges one dollar per day for a DVD.
Redbox is considering options that include price increases to offset the higher small-ticket interchange, DigitialTransactions.net reports.