Fed: Post-Durbin Debit Interchange Down, Card-Not-Present Spending and Fraud Up 

March 7, 2013

According to a Federal Reserve report released Tuesday, debit interchange fee revenue in the fourth quarter of 2011 plummeted for issuing banks not exempt from the Durbin Amendment after its October 2011 implementation. At covered banks (issuers with more than $10 billion in assets) debit interchange fees were more than halved, averaging 24 cents per transaction in the last three months of 2011 after averaging 50 cents per transaction for the first nine months of that year. At banks exempt from the Durbin provisions, debit interchange fees averaged 45 cents per transaction during the first three quarters of 2011 and only fell to 43 cents after the law was implemented in October.

Subsequent to the report’s release, the Fed has stated it will not consider altering the interchange caps of the Durbin Amendment, according to reports.

The report also examined debit card use and fraud, revealing good and bad news for card-not-present (CNP) merchants. Consumers made 5.1 billion CNP transactions using debit cards in 2011, accounting for 11 percent of all debit transactions and up 41 percent from 2009. The average value of CNP debit transactions was more than double that of card-present transactions ($75. 81 vs. $43.52).

Official figures for fraud perpetrated using debit cards in 2011 showed CNP fraud to be the most prevalent type, accounting for 42 percent of overall fraudulent transactions. Counterfeit fraud came in second, accounting for a third of fraudulent transactions and most of the rest was on lost or stolen cards.

To delve deeper into the numbers, including how much more fraud occurs on signature transactions compared to PIN, download the full Fed report .