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Federal Reserve Reports on Interchange Fee Revenue and Debit Card Fraud Losses
Wednesday, September 24, 2014 6:35 AM

On Sept. 18, the Federal Reserve Board released a report containing summary information on the volume and value, interchange fee revenue, certain issuer costs, and fraud losses related to debit card transactions in 2013. The report is the third in a series to be published every two years pursuant to section 920 of the Electronic Fund Transfer Act.

In the report, the Board estimated debit-card fraud losses to all parties (merchants, cardholders, and issuers) at $1.57 billion in 2013, with an average loss of approximately 8 basis points as a share of transaction value, up slightly from 2011. The median covered issuer's average fraud loss as a share of transaction value was 5 basis points, up slightly from 4.7 basis points in 2011. The median covered issuer had average fraud prevention and data security costs of slightly more than 1.4 cents per transaction.

The Board does not plan to propose revisions to the Regulation II interchange fee standard or the fraud-prevention adjustment based on these survey data.

Sixty-four percent of covered issuers had average ACS costs, including issuer fraud losses, below 21 cents plus 5 basis points of the value of a transaction (the base component of the interchange fee standard) in 2013. This proportion is slightly lower than the 66 percent of covered issuers with average ACS costs below the maximum interchange fee in 2011. Covered issuers with average ACS costs below the maximum interchange fee in 2013 processed over 99 percent of all reported covered transactions, the same proportion as in 2011.

For more details on this report, go to the Federal Reserve's website.