FRB seeks comments on maximum interchange fee that a large debit card issuer can receive for a debit card transaction

[pmbug]

The Federal Reserve Board on Wednesday requested comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward.

By law, the Board is required to establish standards for assessing whether an interchange fee received by a large debit card issuer for processing a transaction is reasonable and proportional to certain issuer costs. The Board first implemented this statutory requirement in 2011, setting an interchange fee cap for debit card issuers with $10 billion or more in assets. The proposal would adjust the interchange fee cap to reflect changes in issuer costs since the rule first took effect. For example, the cap on an average-sized $50 debit card transaction would decline from 24.5 cents under the current rule to 17.7 cents under the proposal. In addition, the proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Board from large debit card issuers.

The Board today also approved the release of the latest biennial report detailing data collected from large debit card issuers on interchange fees, issuer costs, and fraud related to debit card transactions in 2021.

The comment period will close 90 days after the proposal is published in the Federal Register.

Federal Reserve Board requests comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction

The Federal Reserve Board on Wednesday requested comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a de

www.federalreserve.gov

As I read this, it occurred to me that this interchange fee is an analogue of gas fees in a crypto system. The most well known cryptos (Bitcoin, Ethereum) have crazy high transaction costs, but there are numerous platforms that have gas fees that are very small fractions of a penny for a transaction (like $0.00001 per transaction on Stellar [XLM]). Competition is good, right?

 

[pmbug]

...
Visa Inc. and Mastercard Inc. agreed to lower and cap credit-card interchange rates as part of a landmark settlement with U.S. merchants that follows almost two decades of litigation, the parties said Tuesday.

Through the blockbuster agreement, which merchants say is one of the largest in U.S. antitrust history, Visa (V) and Mastercard (MA) will lower published credit-card interchange fees by four basis points in the U.S. for at least three years. The companies also won't raise interchange fees for five years above the rates that were in place at the end of 2023.

While the interchange concessions run behind the scenes, the companies also agreed to changes that could be more visible to consumers. For example, they've simplified rules around surcharging and established new policies around "steering," through which merchants could incentivize shoppers to use particular cards.
...

More:

Visa, Mastercard agree to lower credit-card fees in landmark merchant settlement

www.morningstar.com

 

[searcher]

Definitely related.

WSJ

JPMorgan, Bank of America and other banks explore a deal to shake up payments world​

Some of the largest banks in the country have been exploring an acquisition that could allow them to get around one of the laws they hate most: the limits on fees they earn on debit-card transactions.

When Capital One Financial bought Discover Financial in a $50.6 billion deal, it got a network that cut out the need for a middleman in card transactions and allowed it to deal more directly with merchants.

Now, big banks are looking on with envy because owning a network can mean exemption from a federal law that caps debit-card fees. Those fees collectively amount to billions of dollars each year across the industry, but banks have long complained the government-defined cap limits their ability to offer customers debit-card rewards and other services.

Some have been exploring a small deal that could upend the rules, though they are worried about political backlash if they try.

More:

https://www.msn.com/en-us/money/mar...p-payments-world/ar-AA27ltkp?ocid=socialshare