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Board of Governors of the Federal Reserve System
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Payment Systems

Features

Interchange Fees and Payment Card Networks: Economics, Industry Developments, and Policy Issues
This paper provides background for understanding interchange fees and payment card networks. It describes the operation of a typical payment card system, presents a summary of the economic theory underlying interchange fees, and discusses various developments in the U.S. payment cards industry, as well as legal and regulatory developments abroad. The paper concludes with a discussion and critical evaluation of a number of potential policy interventions.
Board adopts revisions to Payment System Risk policy
The Board adopted revisions to the PSR policy designed to improve intraday liquidity management and payment flows for the banking system, while also helping to mitigate the credit exposures to the Federal Reserve Banks from daylight overdrafts. The revisions include a new approach that explicitly recognizes the role of the central bank in providing intraday balances to healthy depository institutions, a fee-based incentive for depository institutions to collateralize overdrafts, and modifications to intraday credit limits.

Last update: November 6, 2009