MasterCard Worldwide’s new tiered-interchange rates will cut Cardtronics Inc.’s ATM operating gross profit by nearly $2 million during the remainder of the year for transactions routed over MasterCard’s Cirrus network, Cardtronics said in a May 7 U.S. Securities and Exchange Commission filing.
Cardtronics, a Houston-based ATM independent sales organization, made only an oblique reference to MasterCard in the filing for the quarter ended March 31.
“A global network brand on April 1 enacted a significant reduction in net interchange rates it pays domestic ATMs deployers for ATM transactions routed across its debit network. Such a rate change is expected to reduce our ATM operating gross profits by approximately $1.5 million over the remainder of 2010,” Cardtronics wrote in the filing. MasterCard is the only global network to cut interchange on that date. The company’s tiered interchange rates apply to domestic cash withdrawals (see story).
MasterCard last month introduced a tiered interchange-rate system that includes a base tier, tier 1 and tier 2. Base-tier banks are MasterCard’s smallest card issuers based on quarterly transaction volume. Tier 1 banks are MasterCard’s largest card issuers and tier 2 banks are somewhere in between.
MasterCard’s new tiered system reduces the gross interchange MasterCard’s tier 1 card issuers pay ATM ISOs and bank-owned ATM operators to 35 cents from 50 cents per domestic cash withdrawals routed over Cirrus. Tier 2 card issuers pay a gross interchange rate of 45 cents per each domestic-cash withdrawal, down from 50 cents.
The cuts angered ATM ISO owners and operators.
The National Association of ATM ISOs, which represents ATM ISO owners and operators, complained MasterCard’s tiered-interchange rates would dramatically reduce companies’ revenues and even put some ISOs out of business.
Cardtronics is the first ATM ISO to detail how much MasterCard’s tiered interchange rates will affect a company’s revenue.
During the first quarter of this year, the Houston-based ATM independent sales organization reported an ATM operating gross profit of $396 per machine, up 25.3% compared with $316 per machine in 2009’s first quarter. Cardtronics operated 28,048 company- and merchant-owned ATMs in the United States during the quarter.
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