Debit Fee Interchange Income: All Clear or Danger Ahead?
Under the Durbin Amendment, debit card issuers with total assets ≥ $10 billion had their debit card interchange fees capped at $0.21 per transaction, plus 5 basis points multiplied by the transaction’s value. Furthermore, non-exempt financial institutions that comply with the Fed’s fraud-prevention standards may charge an additional $0.01 fee. Some analysts and regulators thought the Durbin Amendment might also indirectly lead to a decline in debit card interchange fees for exempt financial institutions, i.e., those with total assets < $10 billion. Prior to the Amendment’s implementation, there was some concern that card networks might not offer two-tiered fee structures to accommodate higher interchange fees for exempt financial institutions.