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Federal Reserve Board publishes report containing summary information on debit card transactions in 2015

Release Date: November 30, 2016

For release at 10:00 a.m. EDT

The Federal Reserve Board on Wednesday published a report on debit card transactions in 2015, including summary information on the volume and value, interchange fee revenue, certain issuer costs, and fraud losses. The report is the fourth in a series to be published every two years pursuant to section 920 of the Electronic Fund Transfer Act (EFTA).

The Board's Regulation II (Debit Card Interchange Fees and Routing), which implements this provision of the EFTA, provides that a debit card issuer subject to the interchange fee standard (a covered issuer) may not receive an interchange fee that exceeds 21 cents plus 5 basis points (0.05%) multiplied by the value of the transaction, plus a 1-cent fraud-prevention adjustment, if eligible. The regulation does not apply to debit card issuers with consolidated assets of less than $10 billion, certain government-administered debit cards, and certain prepaid cards. The interchange fee standard became effective on October 1, 2011.

As in prior years, covered issuers' costs of authorizing, clearing, and settling (ACS) debit card transactions, excluding issuer fraud losses, varied greatly across respondents in 2015. The median issuer had an average ACS cost of 12.3 cents and the issuer at the 75th percentile had an average ACS cost of 30.5 cents. Issuers with the highest debit card transaction volume generally had the lowest ACS costs per transaction. The overall average ACS cost per transaction in the industry was 4.2 cents per transaction, down from 4.6 cents per transaction in 2013.

The Board estimated debit-card fraud losses to all parties (merchants, cardholders, and issuers) increased by 44 percent from 2013 to $2.41 billion in 2015, with an average loss of 10.3 basis points (0.103%) as a share of transaction value as compared to 8.0 basis points (0.08%) in 2013. The median covered issuer's average fraud loss as a share of transaction value was 6.6 basis points (0.066%), up from 5.1 in 2013. The median covered issuer had average fraud prevention and data security costs of 1.9 cents per transaction.

Sixty-six percent of covered issuers had average ACS costs, including issuer fraud losses, below 21 cents plus 5 basis points (0.05%) of the value of a transaction (the base component of the interchange fee standard) in 2015. This proportion is slightly higher than the 64 percent of covered issuers with average ACS costs below the maximum interchange fee in 2013. Covered issuers with average ACS costs below the maximum interchange fee in 2015 processed more than 99 percent of all reported covered transactions, the same proportion as in 2013.

2015 Interchange Fee Revenue, Covered Issuer Costs, and Covered Issuer and Merchant Fraud Losses Related to Debit Card Transactions (PDF)

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