Board Approves Final Debit Interchange Fee Rule

Debit card issuers may charge merchants a maximum interchange fee of 21 cents per transaction plus 5 percent of the transaction value under the Board of Governors’ final rule issued on June 29, 2011.

An issuer may charge an additional 1 cent per transaction if it develops and implements fraud prevention programs. To illustrate the impact of the new rule, the maximum interchange fee that a nonexempt debit card issuer will be able to charge a merchant on a $40 debit transaction is 24 cents (21-cent base component, 5 percent of the value—2 cents—and 1-cent fraud adjustment). The fee cap is effective Oct. 1, 2011.

Issuers with $10 billion or less in total assets are exempt. To assist in determining which issuers are subject to the fee standards, the Board is publishing lists of institutions that are above and below the exemption asset threshold. As of July 12, 2011, there were about 15,000 exempt financial institutions.

The Board also clarified that prepaid cards meet the definition of debit cards and would be subject to the debit interchange fee restrictions unless the issuing bank qualifies for the exemption.

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Small Issuer Exemption

How We Arrived at the Debit Card Interchange Fees and Routing Proposals

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