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The Fed’s take on debit interchange post-Durbin

April 25, 2013 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

In conjunction with the release of its recent PIN vs. signature survey data, the Fed announced that it would not adjust its cap on interchange rates.

The survey showed that by volume, signature networks processed 98 percent of chargebacks and 84 percent of returns, while PIN networks processed the remaining 2 percent of chargebacks and 16 percent of returns.

According to the survey, by value, signature networks handled 98 percent of chargebacks and 88 percent of returns.

The Fed report states issuers' authorization, clearing, and settlement (ACS) costs averaged 5 cents per transaction in 2011. The average ACS cost for a PIN transaction was lower than the ACS cost for a signature transaction, just as it was in 2009. However, the survey found that the gap is no longer as wide.

In 2009, the average ACS cost was 8.4 cents per signature transaction and 5 cents per PIN transaction, a difference of 3.4 cents. In 2011, the average ACS cost was 5.5 cents per signature transaction and 3.1 cents per PIN transaction, a difference of only 2.4 cents.

Another factor in the ongoing EMV migration is the discussion over a common code for routing EMV debit transactions to multiple networks, as mandated by federal law. My next blog will focus on the progress being made toward an adoption of a common U.S. debit application identifier.

Republished by permission from the Shazam Network Blog

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