The FederalReserve has declined to change the cap that limits the amountof debit card interchange that large asset debit issuers can makeper transaction.

The decision came after a recent Federal Reserve reportdocumented a slip in debit interchange income for community banksand credit unions.

The debit interchange cap for large asset debit issuers was oneof the chief regulatory changes mandated by the Durbin Amendmentto the most recent financial reform law.

The report, “2011 Interchange Fee Revenue, Covered Issuer Costs,and Covered Issuer and Merchant Fraud Losses Related to Debit CardTransactions,” is the second report the Federal Reserve has issuedin compliance with the Electronic Funds Transfer Act.

The document reported the total number of debit cardtransactions in 2011 along with the interchange they generated andfound that small asset debit card issuers, which were supposed tobe exempt from the cap, had in fact seen their debit interchangedecline on a per transaction basis.

“During this period, 82% of prepaid transactions were exemptfrom the interchange fee standard. For covered issuers, interchangefees for all transactions averaged 24 cents per transaction, a 52%decrease from the 50-cent average received by covered issuersduring the first nine months of 2011,” the Fed reported.

“Over all transactions, exempt issuers received an averageinterchange fee of 43 cents per transaction, a 4% decline from the45 cents per transaction average during the first nine months of2011,” the report said.

This echoes a previous credit union survey, conducted by CUNA, which also reported an interchangedecline.

The Electronic Payments Coalition, which opposed the interchangecap from the beginning, hailed the move announced Tuesday.

“The Durbin Amendment was bad policy from day one,” said TrishWexler, spokeswoman for the Electronic Payments Coalition. “It'sbeen more than a year, and consumers are still not seeing any ofthe savings they were promised.

“The Durbin Amendment has harmed consumers by forcing cardissuers to eliminate free checking and other consumer benefits tomake up for an $8 billion revenue loss,” Wexler said. “With today'sannouncement, at least the Durbin Amendment wasn't made any worsethan it already is.”

But the Merchant Payments Coalition, interchange cap supporters,were predictably disappointed.

“This report shows that the Fed made a mistake in implementingan effective law. Consumers and merchants should be benefiting morefrom the reforms,” said Jennifer Hatcher, senior vice president,Government and Public Affairs, Food Marketing Institute, a memberof the Merchants Payments Coalition.

“No merchants in a competitive marketplace mark up theirproducts and services by 500%. They would be put out of business.It should be the same for banks and credit card companies,” Hatchersaid.