At least one vending machine payment-processing company has cut off acceptance of debit MasterCards because of new debit card interchange rates that resulted from the Durbin amendment.

USA Technologies Inc. last fall dove into negotiations with the major payment card networks when new Federal Reserve rules went into effect Oct. 1 that changed debit-interchange prices. Though the Fed essentially cut in half how much issuers earn in interchange income, Visa Inc. and MasterCard Worldwide also adjusted their debit rates so the cost to accept small-ticket purchases went up (see story).

Under the new pricing, the debit rate for both card brands changed to 0.5% of the sale plus 21 cents from 1.55% plus 4 cents previously, according to USA Technologies. As a result, the transaction cost on a $2 transaction rose to about 22 cents from about 7 cents under the previous rate, the Malvern, Pa.-based firm contends.

A spokesperson for USA Technologies says Visa agreed to set a new, lower rate for one year that is actually "slightly lower" than the rate before the new rule took effect. USA Technologies declines to provide details of its deal with Visa.

MasterCard refused to negotiate, so for now USA Technologies has cut off debit MasterCard acceptance at its vending machines, the spokesperson says.

USA Technologies is working with its network of operators to provide additional payment options.

The firm in January began testing a two-tiered pricing scheme on certain vending machines, enabling consumers to get a discount "of about 10 cents" on small-ticket cash purchases such as a candy bar; vending-machine operators may increase the discount on higher-priced items such as cigarettes, the spokesperson says.

A message appears on the vending machine's reader inviting the consumer to get a discount if they pay with cash; customers who try to use a debit MasterCard get a "use another card" message, she says.

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