The Dodd-Frank Act exempted small debit card issuers from the interchange fee standard set forth in the regulations which were adopted, but not from the statute’s prohibition on network exclusivity. For the purpose of the rule, a small debit card issuer is an issuer that, together with its affiliates, has assets of less than $10 billion. During the rulemaking process, numerous parties raised concerns that the exemption from the interchange fee standard would not be effective because networks would not establish separate interchange fee schedules for exempt issuers. These parties were concerned that merchants would route their transactions over the lowest-cost available network, placing downward pressure on interchange fees and thereby undermining further the effectiveness of the small issuer exemption from the interchange fee standard. Moreover, numerous parties raised concerns that the network exclusivity prohibition would impose costs on small debit card issuers.
The Board of Governors of the Federal Reserve System has recently released a study of the effect on interchange fees since adoption of the related rule. Among other things, the Fed released the following data points:
- In 2009, the average interchange fee for all issuers was 43 cents. For the first three quarters of 2011, before the interchange fee standard took effect, exempt issuers received an average of 44 cents per debit card transaction. The average interchange fee per transaction received by exempt issuers has returned to the 2009 level of 43 cents since the implementation of the interchange fee standard.
- In 2012, exempt issuers received $7.4 billion in total debit card interchange revenue, compared with approximately $5.3 billion in debit card interchange revenue in 2009.