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Is a Lower Debit Cap Coming?

Archived Industry News:Is a Lower Debit Cap Coming?

Last Updated: 7/1/2021 2:57 PM

Is a Lower Debit Cap Coming?

An article in Digital Transactions examines the pressure that is building on the Federal Reserve to take action on a debit card interchange-fee regulation that it has left intact for 10 years despite sweeping changes in the payments business. The Fed set the debit cap at 21 cents, with an additional penny allowed for fraud-prevention costs and 0.05% for recovery of fraud losses. The latest Fed report indicates online transactions sustained $12.40 in fraud losses per $10,000 in volume in 2019, up from $7.80 in 2011. Merchants absorbed 56.3% of these losses, up from 52.8% in 2017, according to the report, indicating that percentage could be even higher now with e-commerce volume booming since the onset of Covid-19. The report’s numbers lead some observers to predict the Fed will approach covered issuers with a revised fee cap that could be significantly lower than the current one. Read the article.

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