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Prohibition of exclusive debit networks to aid Visa rivals

Exclusive network arrangements allow cards to offer only a single network for signature debit and PIN-debit purchases. The new law requires debit card issuers to enable two networks on their cards.

According to DigitalTransactions.com, the rule will likely divert business from Visa Inc., the debit leader, and benefit rivals such as MasterCard Inc., Pulse, Star and others.

“We believe a number of issuers will need to add another PIN debit network to their cards,” Discover chairman David Nelms said Thursday on a conference call, according to DigitalTransactions.com.

Discover has added capacity to its Pulse electronic funds transfer network to position itself for substantial volume increase.

Final language to the rule is still unknown. The Federal Reserve Board of Governors will release guidance to the Durbin Amendment, most commonly known for its provision which caps debit card transaction fees, on July 21.

“Certainly, most of industry observers are thinking more of that it’s going to be one signature, one PIN sufficient,” Nelms said on the call, DigitalTransactions.com reports.

During the conference call, Nelms discussed mobile payments and said he remains “bullish” on Discover’s potential.

“Our Pulse network is highly scalable – we have taken actions to build capacity in advance of potential demand…and if we need to add even more capacity, we will add even more,” Nelms said, according to DigitalTransactions.com.

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