Federal Reserve Proposes Interchange Cap at 12 Cents
The Board of Governors of the Federal Reserve today proposed a rule which would cap debit card interchange at no more than 12 cents per transaction.
According to the proposed rule, the allowable costs for interchange would be limited to no more than the issuer's allowable costs divided by the number of electronic debit transactions on which the issuer received or charged an interchange transaction fee in the calendar year. Or the issuer could receive debit interchange capped at 12 cents per transaction.
The board defined "allowable costs" as "issuer's costs that are attributable to its role in authorization, clearance, and settlement of electronic debit transactions and that vary, up to existing capacity limits within a reporting period, with the number of electronic debit transactions sent to the issuer. Network fees paid by the issuer are excluded from allowable costs."