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The Federal Reserve is proposing a roughly 30% cut in interchange fees that debit card issuers charge merchants based largely on reduced transaction costs reported by banks.
With debit card transactions averaging about $50 each, the fees on such a purchase would drop to 17.7 cents from 24.5 cents under the current rule.
Fed officials said it’s not clear if merchants will pass these costs savings onto consumers.
The lower fees reflect reduced transaction costs by banks reported to the Federal Reserve.
The total fee of 17.7 cents s by banks has three components: a base component for transaction costs that’s being lowered to 14.4 cents from 21 cents per transaction; an ad valorum or, estimated value of the goods or transaction concerned fee, which is being dropped to 4 basis points from 5 basis points, and a fraud-prevention adjustment, which will increase to 1.3 cents from 1 cent.
The Federal Reserve is publishing the proposed changes in the Federal Register and will accept comments on it for 90 days.
The current cap on fees dates back about 12 years during a time of technology investment by banks and other debit card issuers.
The proposed rule also sets up a mechanism for reviewing the fee cap every two years.
