SOURCE: Debitman

August 21, 2006 08:00 ET

WESCO Cuts Interchange Fees With Debitman and Card Holders Get Discounted Gas

Retailer-Issued Debit Card Enables Michigan Chain of Gas and Convenience Stores to Offer Cents off at the Pump

SAN MATEO, CA -- (MARKET WIRE) -- August 21, 2006 -- Debitman Card, Inc., creator of The Retailer's Network, announced today that WESCO Stores has joined the payment network and is now issuing its own branded debit cards to customers at its 51 Michigan locations. WESCO (www.gowesco.com) is combining the debit card with a consumer loyalty program that now automatically discounts gas prices at the pump for card users and in the future will incorporate merchandising promotions.

WESCO recently completed an in-depth pilot at two of its locations utilizing a privately issued debit card and quickly concluded that it could offer consumers relief from high gas prices while reducing the exorbitant costs of traditional credit and debit card acceptance, which is now the most common form of payment at the pump.

Consumers who sign up for WESCO's debit card experience savings on gas purchases at any WESCO store, as well as the convenience of using the card at more than 200,000 merchant locations in the U.S. that participate in The Retailer's Network, including Wal-Mart, Sam's Club, Barnes & Noble, and CVS.

"Credit card interchange fees are phenomenally high and adding to already high gasoline costs at the pump," said Rachelle Osborn, IT Director of Wesco. "We are always looking at ways to build value by offering quality while reducing cost and Debitman was a perfect fit. Issuing our own debit card leverages the Debitman network to sharply reduce our processing fees, so we are able to turn those savings back to participating consumers with an automatic two-cents-per-gallon price reduction at the pump."

Osborn noted that WESCO processes approximately 2.5 million transactions per month, with more than 70% charged to Visa and Mastercard debit and credit cards, which both carry costly transaction fees.

"Debitman made it simple for us to launch a program for customers to easily sign up," Osborn explained. "Once they receive their debit card it can be used in-store or at the pump exactly the same way as any other payment card, except that at the pump it recognizes that it is a WESCO debit payment and automatically drops the gasoline price 2 cents per gallon. That's a win for our customers and for WESCO."

Mike Grossman, CEO of Debitman, said many retailers such as WESCO are seeking to gain control over the costs of electronic payments that they ultimately have to pass on to their customers. "As consumers learn about the high fees that merchants pay for debit and credit transactions they eagerly embrace efforts by retailers to create a lower-cost system," Grossman said. "Merchants are able to pass on savings while benefiting from increased loyalty and enhanced revenue as consumers take advantage of the retailer-specific promotions."

Credit card interchange fees function like a hidden tax on consumer purchases by forcing retailers to increase prices to offset costs; in 2005, MasterCard and Visa earned $30 billion from consumer card-based transactions.

The continually increasing fees set by Visa, Mastercard and the banks that issue their cards are exacerbating price increases at the pump as they are based on a percentage of the total transaction amount. Debitman, however, provides all card-accepting merchants with a low flat-fee per transaction that's significantly less expensive when compared with bank-issued debit and credit cards. Card-issuing merchants experience even lower costs through substantial rebates earned when their cards are used at any participating retail operation.

About Debitman

Debitman® created and operates The Retailer's Network, the only national, interoperable electronic payment network for retailer-issued debit cards. Founded in 2000 with a commitment to lowering interchange fees for card transactions and generating revenue for card-issuing retailers, the company is privately held and headquartered in San Mateo, CA. For additional information, visit www.debitman.com.

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