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Federal Reserve Board of Governors

Regulation II (Debit Card Interchange Fees and Routing)

Average Debit Card Interchange Fee by Payment Card Network

The Board’s Regulation II provides that an issuer subject to the interchange fee standard (a non-exempt issuer) may not receive an interchange fee that exceeds 21 cents plus 0.05 percent multiplied by the value of the transaction, plus a 1-cent fraud-prevention adjustment, if eligible.a The data that payment card networks reported to the Board for 2012 showed that the average interchange fee per transaction received by non-exempt and exempt issuers remained at the fourth quarter-2011 levels of 24 cents and 43 cents, respectively.b 

From the fourth quarter of 2011 to 2012, the average interchange fee to non-exempt issuers increased from 24 to 25 cents per signature debit transaction and from 23 to 24 cents per PIN debit transaction, a 1 percent increase for each.c Interchange to non-exempt issuers as a percentage of average transaction value remained flat at 0.64 percent for signature debit transactions and increased 4 percent to 0.58 percent for PIN debit transactions.

The total debit interchange revenue received by all issuers in 2012 was $15.4 billion, a 24.3 percent decrease from 2011. Exempt issuers received 48 percent ($7.4 billion) of this revenue in 2012, up from 32 percent ($6.6 billion) in 2011. The average interchange fee to exempt issuers remained at 51 cents per signature debit transaction and decreased from 31 to 30 cents per PIN debit transaction, a 3 percent decline. Interchange to exempt issuers as a percentage of average transaction value decreased 3 percent and 4 percent for signature and PIN debit transactions to 1.40 percent and 0.69 percent, respectively.

All payment card networks whose interchange fees are reported in the table below provided a higher average interchange fee to exempt issuers than to non-exempt issuers in 2012.d The difference between the average per-transaction interchange fee provided to exempt and non-exempt issuers was about the same as in the fourth quarter of 2011. In 2012, exempt issuers received slightly more than double and 1.3 times the average interchange fee per transaction for signature and PIN debit transactions, respectively, compared with the fees to non-exempt issuers.

Some payment card networks provide incentive payments to merchants, acquirers, and issuers for reasons such as reaching specified transaction volume thresholds, funding marketing activities that promote the network’s brand, and adding the network on the issuer’s debit cards.e Payment card networks provided $1.2 billion in incentive payments to all parties in 2012, the same as the amount paid in 2011. Merchants and acquirers received a larger proportion (31 percent) of these payments in 2012, compared with 25 percent in 2011. Non-exempt issuers received a smaller proportion (71 percent) of the issuer incentive payments than they did in 2011 (81 percent). Signature debit networks generally paid a higher average incentive payment per transaction to non-exempt issuers (3 cents) than to exempt issuers (2 cents). PIN debit networks paid on average less than 1 cent per transaction to both non-exempt and exempt issuers.

Merchants and issuers also pay fees to payment card networks.f These fees include, for example, switch fees that are assessed on each debit transaction and license and connectivity fees that are fixed for a particular period. Overall, signature debit networks charged substantially higher fees, on a per-transaction basis (12.5 cents), than did PIN debit networks (5.7 cents), and the difference between these fees on a per-transaction basis widened in 2012. Merchants and issuers paid a total of $5.1 billion in network fees in 2012, an increase of 11 percent from 2011. Merchants paid a slightly higher proportion (56 percent) of these fees in 2012, compared to 55 percent in 2011. On a per-transaction basis, fees paid by non-exempt issuers to signature and PIN debit networks both remained at the level of the fourth quarter of 2011 of 4 cents and 1 cent, respectively. Fees paid by exempt issuers to signature debit networks remained at the level of the fourth quarter of 2011 – 9 cents – while fees to PIN debit networks increased from 3 cents in 2011 to 4 cents in 2012.

Payment card networks processed 50.3 billion debit card transactions with a value of nearly $2 trillion in 2012, an 8 percent increase in both volume and value from 2011. Signature debit transactions represented about 64 percent of transaction volume and 62 percent of transaction value in 2012. The growth in the number of transactions for exempt issuers (12.3 percent) outpaced the growth in the number of transactions for non-exempt issuers (5.8 percent). Transactions made using debit cards issued by non-exempt institutions represented 66 percent of total debit card transactions in 2012, a slight decline from 67 percent in 2011.

Footnotes

a. Non-exempt issuers may receive an interchange fee that is higher than the standard for certain transactions using debit cards issued pursuant to government-administered payment programs and certain prepaid card transactions. Return to text.

b. Payment card networks reported an average interchange fee per transaction for all issuers of 43 cents in 2009. For the fourth quarter of 2011, following the effective date for the standard, the average interchange fee per transaction received by non-exempt issuers dropped to 24 cents, while the average interchange fee received by exempt issuers remained at 43 cents. Return to text.

c. All percent change calculations are based on unrounded numbers, which are available in the Excel and CSV data files. These files include historical data. Return to text.

d. Alaska Option reported having no non-exempt issuers in 2012. Return to text.

e. Incentive payments vary widely from network to network, and within a network across merchants, acquirers, and issuers. These totals do not reflect the heterogeneity of these payments. Return to text.

f. The Board requested information about the fees paid by acquirers. Acquirers generally pass through these fees to their merchants as part of their merchant discounts. Return to text.

 

Data

Payment Card Survey for calendar-year 2012

Visit the Excel viewer Leaving the Board for more information. Filter and sort features have been added to the column headers in the Excel spreadsheet to assist you with searching and to allow for the creation of custom datasets. Click on the arrow button in each column header to view and select the different filter and sort features.
 

   Average Debit Card Interchange Fee by Payment Card Network
Network1 2012
Exempt issuers2 Non-exempt issuers3 All issuers4
% of total
number of
transactions5
% of total
value of
transactions6
Average
transaction value7
Average
interchange fee
per transaction8
Interchange fee
as % of average
transaction
value9
% of total
number of
transactions5
% of total
value of
transactions6
Average
transaction value7
Average
interchange fee
per transaction8
Interchange fee
as % of average
transaction
value9
Average
transaction value7
Average
interchange fee
per transaction8
Interchange fee
as % of average
transaction
value9
Signature 34.2% 33.0% $36.22 $0.51 1.40% 65.8% 67.0% $38.16 $0.25 0.64% $37.49 $0.33 0.89%
Discover       $1.07 1.23%       $0.20 0.58%   $1.02 1.21%
MasterCard       $0.57 1.52%       $0.26 0.68%   $0.40 1.04%
Visa       $0.48 1.35%       $0.24 0.63%   $0.31 0.84%
PIN 34.0% 35.2% $43.08 $0.30 0.69% 66.0% 64.8% $40.92 $0.24 0.58% $41.65 $0.26 0.62%
ACCEL/Exchange       $0.28 0.68%       $0.20 0.44%   $0.28 0.66%
AFFN       $0.57 1.42%       $0.19 0.43%   $0.22 0.51%
Alaska Option10       $0.12 0.25%       NR NR   $0.12 0.25%
ATH       $0.32 0.82%       $0.08 0.20%   $0.12 0.31%
Credit Union 24       $0.21 0.44%       $0.20 0.35%   $0.21 0.43%
Interlink       $0.34 0.87%       $0.24 0.61%   $0.25 0.64%
Jeanie       $0.26 0.56%       $0.18 0.40%   $0.22 0.48%
Maestro       $0.33 0.61%       $0.24 0.60%   $0.25 0.60%
NetWorks       $0.32 0.95%       $0.24 0.72%   $0.26 0.79%
NYCE       $0.32 0.73%       $0.23 0.52%   $0.28 0.65%
PULSE       $0.31 0.75%       $0.24 0.57%   $0.27 0.66%
SHAZAM       $0.28 0.72%       $0.19 0.43%   $0.26 0.65%
STAR       $0.29 0.66%       $0.24 0.55%   $0.27 0.62%
All networks 34.1% 33.8% $38.68 $0.43 1.12% 65.9% 66.1% $39.15 $0.24 0.62% $38.99 $0.31 0.79%

1. Networks listed are defined as payment card networks under the Board's Regulation II. In 2012, American Express had arrangements with a very small number of third-party issuers for which American Express is a payment card network as defined in Regulation II. American Express has either terminated or plans to terminate each of these arrangements. Presto!, by the network's policy, is accessible exclusively through one merchant, which is affiliated with the network. American Express and Presto! statistics are included in the "Signature" and "PIN" statistics, respectively, and the "All networks" statistics but are not listed individually. Statistics for the "Signature," "PIN," and "All networks" rows are weighted averages based on each network's number or value of transactions. Return to table.

2. Exempt issuers: Issuers exempt from the interchange fee standard. Exempt issuers have total worldwide banking and nonbanking assets (including assets of affiliates), other than trust assets under management, that are less than $10 billion as of December 31, 2011. Return to table.

3. Non-exempt issuers: Issuers subject to the interchange fee standard. Return to table.

4. All issuers: Exempt issuers and non-exempt issuers. Return to table.

5. % of total number of transactions: The percentage of settled purchase transactions made with cards issued by exempt or non-exempt issuers. For non-exempt issuers, this includes all general-use prepaid card purchase transactions, some of which may be exempt from the interchange fee standard. Return to table.

6. % of total value of transactions: The percentage of the value of settled purchase transactions made with cards issued by exempt or non-exempt issuers. For non-exempt issuers, this includes all general-use prepaid card purchase transactions, some of which may be exempt from the interchange fee standard. Return to table.

7. Average transaction value: The value of settled purchase transactions divided by the number of settled purchase transactions. Return to table.

8. Average interchange fee per transaction: Total interchange fees divided by the number of settled purchase transactions. Return to table.

9. Interchange fee as % of average transaction value: Total interchange fees divided by the value of settled purchase transactions. Return to table.

10. Alaska Option reported having no non-exempt issuers in 2012. Return to table.

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Last update: August 2, 2013