Beginning in October 2011, the Durbin Amendment capped the amount banks could charge merchants to process debit transactions at 21 cents per transaction. The Fed report revealed that, for applicable institutions, interchange revenue averages fell by 52 percent in the final three months of 2011 from the first nine months of the year. Institutions not covered by the rule saw a four percent decline in the interchange fee average during the same time period, CSPnet.com reports.
The rules are not applicable to debit card issuers with assets of less than $10 billion, and more than one-third of all debit transactions were processed by issuers that are exempt from the measure.
In 2011, U.S. payment networks processed nearly 47 billion debit card transactions valued at a total $1.82 trillion. The report also estimated debit card fraud-related losses to all parties, including merchants, issuers and cardholders, to be $1.38 billion in 2011, a slight decrease from 2009.
Additionally, the report found that 67 percent of covered issuers had authorizing, clearing and settling costs below 21 cents in 2011, and those with average ACS costs of less than 21 cents processed more than 99 percent of all reported covered transactions, according to CSPnet.com.
Retailers who pushed for reduced interchange fees said that the data proves that the interchange-fee rule is “deeply flawed.”
“The Federal Reserve’s unwillingness to revisit their flawed rules despite this compelling data is astounding and retailers will continue to use all means necessary to ensure the reforms are implemented as the law intended,” Bill Hughes, the senior vice president of government affairs at the Retail Industry Leaders Association, said, American Banker reports.
The median issuer fraud loss remained unchanged from 2009, and, when rounded to the nearest cent, median data security and fraud-prevention costs remained at one cent per transaction.