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Supermarkets Handle Half of Growing Canada-U.S. Cross-Border Debit Transactions

SECAUCUS, N.J. -- U.S. supermarkets have been the primary beneficiaries of the opening of a debit payment network to Canadian shoppers on a widespread basis, fostering increased cross-border transactions, according to U.S. debit-card payments network NYCE Corp.

In the 10 months since Canadian shoppers gained access to the NYCE network, increasing cross-border PIN-debit transaction totals show growing use by consumers from north of the border, and an incremental gain for U.S. retailers. Supermarkets have been particular beneficiaries, accounting for half of these cross-border PIN-debit transactions, according to NYCE Corp., which is a Metavante company.

The last time supermarkets were so measured was for the post-holiday 2004 NYCE cross-border debit release. At that time, supermarkets also made up half of such cross-border PIN-debit transactions.

"While the holiday season delivered new monthly highs for cross-border debit service volumes, March proved to be the biggest month within the first six months of the new service," said NYCE president and c.e.o. Steve Rathgaber in a statement. "Beginning with last fall's Canadian Thanksgiving holiday in mid-October, NYCE processed nearly $6 million in cross-border PIN-debit transactions during the holiday season. In March alone, NYCE handled $6.5 million."

Rathgaber attributed this impressive increase to Canadian snowbirds, spring breakers, and other elements of tourism. The average Canadian cross-border transaction amount still exceeds the average American PIN-debit transaction processed on the NYCE network, he added. Six-month totals for cross-border PIN-debit service by NYCE revealed that the average Canadian transaction in the United States is over $65, while the U.S. average is approximately $47.

According to NYCE, two additional benefits for U.S. retailers are that PIN-debit transactions process more economically for retailers compared with credit cards, and, at $65, the average cross-border PIN-debit transaction probably exceeds cash purchase dollar totals.

From the introduction of cross-border debit in October 2004 through the end of April, Canadian shoppers initiated more than 400,000 PIN-debit transactions in the United States, for a total dollar value nearing $26.5 million.

Noted Rathgaber, "Even at the six-month mark, cross-border debit remained in its infancy, especially considering the early yet impressive, growth came about through word of mouth, statement stuffers, and Web site announcements by Canadian financial institutions."

Florida, New York, and California retailers saw the largest surge during the spring from cross-border PIN-debit by NYCE, with Florida alone originating more than 25 percent of all cross-border transactions. Canadians have initiated transactions in all 50 states, however, with Washington, Arizona, Michigan, Texas, Maine, Nevada, and South Carolina completing the top 10.

In addition to supermarkets, gas stations, clothes stores, discount retailers, and drug stores also experienced considerable transaction volumes during the first six months.

An alliance between NYCE, Canada's Acxsys Corp., and five major Canadian financial institutions allows Canadians to use their debit cards in the United States. Interac Association/Acxsys Corp. tabulates cross-border statistics on an ongoing basis.

Additionally, rival MasterCard Maestro has what Sam Kim, director of public relations at Metavante, NYCE's parent, refers to as "a limited presence in this market." Metavante is the financial technology subsidiary of Marshall & Ilsley Corp.
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