Comment period on Fed’s interchange fee proposal extended to May

The public comment deadline on a Federal Reserve Board interchange fee proposal, which would lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction, has been extended from Feb. 12 to May 24, the Fed said Monday.

The Fed said it also released more data related to the methodology for determining the base component of the interchange fee cap, providing the public “additional information as they consider the proposal.”

The proposal, issued in October, would adjust the interchange fee cap to reflect changes in issuer costs since the Fed Board adopted a final rule on debit interchange in 2011.

All three components of the interchange fee would change under the proposed rule: the base component would decrease from 21.0 to 14.4 cents, the ad valorem component would decrease from 5.0 basis points (multiplied by the value of the transaction) to 4.0 basis points (multiplied by the value of the transaction), and the fraud-prevention adjustment would increase from 1.0 cents to 1.3 cents.

The Fed has said that under the proposal, the cap on an average-sized $50 debit card transaction would decline from 24.5 cents under the current rule to 17.7 cents. It would also adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers.

Federal Reserve Board announces it will extend the comment period on its interchange fee proposal until May 12, 2024 and published additional related data

Additional data regarding base component of interchange fee