Friday, September 19, 2014

Fed Holds Interchange Fee Cap Steady

Based on data released in the Federal Reserve’s biennial survey of debit card issuers’ costs, the Fed said that it will not change its interchange fee cap and fraud-prevention adjustment. The survey showed that the median issuer’s cost of authorizing, clearing and settling debit card transactions was 14.9 cents. Issuers at the 75th percentile had costs of 42.2 cents per transaction. The overall average cost declined slightly from 2011.

Debit card fraud losses rose slightly, with the median issuer’s average fraud loss as a share of transaction value amounting to 0.05% — up from 0.047% in 2011. The Fed estimated that all parties — merchants, issuers and card networks — saw $1.57 billion in debit card fraud losses in 2013.

The survey also showed that 53.7 billion debit and prepaid card transactions amounting to $2.07 trillion were processed in the U.S. in 2013. Transactions grew 8.4% from 2012 to 2013 at banks not subject to the rule, compared to 5.9% for covered issuers. The growth of prepaid cards — averaging more than 36% from 2009 to 2012 — slowed dramatically in 2013.

Read the Federal Reserve survey.

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