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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

Background

The Board's Regulation II provides that an issuer subject to the interchange fee standard (a covered 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. Transactions made using certain reloadable general-use prepaid cards and debit cards issued pursuant to government-administered payment programs are exempt from the interchange fee standard, even if the card is issued by a covered issuer.

As used below, "covered transactions" are transactions made using debit cards issued by covered issuers, excluding transactions made using prepaid or government program cards that are exempt from the interchange fee standard. All other transactions are referred to as "exempt transactions."

Highlights for 2013 Data

  • Average interchange fees per transaction have not changed materially since Q4 2011, when Regulation II took effect.
  • The average interchange fee per covered transaction in 2013 was the same for transactions processed over dual-message networks (which are mostly signature-authenticated) and single-message networks (which are mostly PIN-authenticated), around $0.23 in each case.
  • The average interchange fee per exempt transaction processed over dual-message networks was considerably higher than that for covered transactions ($0.50 vs. $0.23), whereas the average interchange fee per exempt transaction processed over single-message networks was only slightly higher than that for covered transactions ($0.28 vs. $0.23).
  • Average interchange fees per transaction varied considerably across networks; for example, the range was $0.08-$0.24 for covered transactions processed over single-message networks.
  • Across all networks, exempt transactions constituted 36.5% of transaction value and 37.3% of transaction volume, although this proportion varied considerably by network.
  • 91% of prepaid card transactions (by value) were exempt from the interchange fee standard.
  • Prepaid card transactions exempt from the standard constituted 3.6% of transaction value for covered issuers.
Chart 1 Average Interchange Fee per Trasaction. A line graph showing average fees since late 2011 through 2014 by network type: Dual-message networks and Single message networks.
1. Data for years prior to 2013 reflect a split between covered/exempt issuers, rather than covered/exempt transactions.

 

Network1 2013
Exempt transactions2 Covered transactions3 All transactions
(exempt and covered transactions)
% of total
number of
transactions4
% of total
value of
transactions5
Average
transaction value6
Average
interchange fee
per transaction7
Interchange fee
as % of average
transaction
value8
% of total
number of
transactions4
% of total
value of
transactions5
Average
transaction value6
Average
interchange fee
per transaction7
Interchange fee
as % of average
transaction
value8
Average
transaction value6
Average
interchange fee
per transaction7
Interchange fee
as % of average
transaction
value8
Dual-message9 38.4% 37.1% $36.22 $0.50 1.37% 61.6% 62.9% $38.37 $0.23 0.60% $37.54 $0.33 0.89%
Discover 97.1% 97.8% $52.23 $0.73 1.40% 2.9% 2.2% $40.11 $0.24 0.59% $51.88 $0.72 1.38%
MasterCard 49.4% 48.4% $37.23 $0.55 1.49% 50.6% 51.6% $38.68 $0.24 0.61% $37.97 $0.39 1.04%
Visa 34.9% 33.3% $35.65 $0.47 1.33% 65.1% 66.7% $38.29 $0.23 0.60% $37.37 $0.31 0.84%
Single-message10 35.2% 35.5% $40.77 $0.28 0.68% 64.8% 64.5% $40.13 $0.23 0.58% $40.36 $0.25 0.62%
Accel 87.7% 87.1% $42.28 $0.26 0.61% 12.3% 12.9% $44.37 $0.19 0.42% $42.54 $0.25 0.59%
AFFN 82.9% 79.6% $41.09 $0.27 0.65% 17.1% 20.4% $50.91 $0.19 0.37% $42.77 $0.25 0.59%
Alaska Option11 100.0% 100.0% $50.71 $0.18 0.35% 0.0% 0.0% N/A NA NA $50.71 $0.18 0.35%
ATH 18.5% 17.8% $37.13 $0.26 0.69% 81.5% 82.2% $38.78 $0.08 0.21% $38.48 $0.11 0.29%
Credit Union 24 98.4% 98.1% $48.26 $0.23 0.47% 1.6% 1.9% $60.13 $0.21 0.34% $48.45 $0.23 0.47%
Interlink 12.1% 11.2% $36.22 $0.36 0.98% 87.9% 88.8% $39.44 $0.24 0.61% $39.05 $0.25 0.65%
Jeanie 60.0% 59.7% $47.08 $0.28 0.60% 40.0% 40.3% $47.65 $0.15 0.31% $47.31 $0.23 0.48%
Maestro 14.1% 14.2% $39.19 $0.25 0.65% 85.9% 85.8% $38.96 $0.24 0.61% $38.99 $0.24 0.62%
NetWorks 28.6% 27.2% $29.96 $0.30 0.99% 71.4% 72.8% $32.21 $0.24 0.73% $31.56 $0.25 0.80%
NYCE 61.9% 60.7% $39.63 $0.30 0.75% 38.1% 39.3% $41.73 $0.23 0.54% $40.43 $0.27 0.67%
PULSE 48.5% 47.7% $40.82 $0.30 0.74% 51.5% 52.3% $42.23 $0.24 0.56% $41.54 $0.27 0.65%
SHAZAM 81.2% 77.7% $38.40 $0.26 0.69% 18.8% 22.3% $47.73 $0.17 0.35% $40.15 $0.25 0.61%
STAR 59.2% 58.9% $42.40 $0.26 0.60% 40.8% 41.1% $42.90 $0.23 0.54% $42.60 $0.25 0.58%
All networks 37.3% 36.5% $37.70 $0.42 1.13% 62.7% 63.5% $39.00 $0.23 0.60% $38.52 $0.30 0.79%

1. Networks listed are defined as payment card networks under the Board's Regulation II. In 2013, 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 "Dual-message" and "Single-message" statistics, respectively, and the "All networks" statistics but are not listed individually. Statistics for the "Dual-message," "Single-message," and "All networks" rows are weighted averages based on each network's number or value of transactions. Return to table.

2. Exempt transaction: Transactions processed by issuers exempt from the interchange fee standard, as well as transactions processed by issuers covered by the interchange fee standard that qualify for another exemption from the standard. Exempt issuers have total worldwide banking and nonbanking assets (including assets of affiliates), other than trust assets under management, of less than $10 billion as of December 31, 2012. Exempt transactions for covered issuers are transactions made with certain debit cards provided pursuant to government-administered payment programs and certain reloadable general-use prepaid cards. Return to table.

3. Covered transactions: Transactions processed by issuers subject to the interchange fee standard that do not qualify for another exemption from the standard. Return to table.

4. % of total number of transactions: The percentage of settled purchase transactions made with cards that are exempt or not exempt from the interchange fee standard. Return to table.

5. % of total value of transactions: The percentage of the value of settled purchase transactions made with cards that are exempt or not exempt from the interchange fee standard. Return to table.

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

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

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

9.Dual-message network:  A payment card network that typically uses separate messages to authorize and clear a transaction. These networks normally process signature-authenticated transactions, although some transactions, such as small-value purchases, may not require any cardholder authentication. In some instances, a dual-message network may use a single message to authorize and clear a given transaction and may require the entry of a PIN for cardholder authentication in that transaction. As applicable, the totals for a particular dual-message network include information on any single-message transactions performed on that network. Return to table.

10. Single-message network:  A payment card network that uses a single message to authorize and clear a transaction. These networks normally process PIN-authenticated transactions, although some transactions, such as small-value purchases, may not require any authentication (PIN-less). Return to table.

11. Alaska Option reported having no covered issuers in 2013. Return to table.

Data for Previous Years

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Last update: September 18, 2014