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FEDERAL RESERVE SYSTEM
12 CFR Part 235
Regulation II; Docket No. R-____
Debit Card Interchange Fees and Routing
AGENCY: Board of Governors of the Federal Reserve System
ACTION: Notice of proposed rulemaking
SUMMARY: The Board is requesting public comment on proposed new Regulation II, Debit Card Interchange Fees and Routing, which (1) establishes standards for determining whether an interchange fee received or charged by an issuer with respect to an electronic debit transaction is reasonable and proportional to the cost incurred by the issuer with respect to the transaction and (2) prohibits issuers and networks from restricting the number of networks over which an electronic debit transaction may be processed and from inhibiting the ability of a merchant to direct the routing of an electronic debit transaction to any network that may process such transactions. With respect to the interchange fee standards, the Board is requesting comment on two alternatives that would apply to covered issuers: (1) an issuer-specific standard with a safe harbor and a cap, or (2) a cap applicable to all such issuers. The proposed rule would additionally prohibit circumvention or evasion of the interchange fee limitations (under both alternatives) by preventing the issuer from receiving net compensation from the network (excluding interchange fees passed through the network). The Board also is requesting comment on possible frameworks for an adjustment to interchange fees for fraud-prevention costs. With respect to the debit-card routing rules, the Board is requesting comment on two alternative rules prohibiting network exclusivity: one alternative would require at least two unaffiliated networks per debit card, and the other would require at least two unaffiliated networks for each type of transaction authorization method. Under both alternatives, the issuers and networks would be prohibited from inhibiting a merchant’s ability to direct the routing of an electronic debit transaction over any network that may process such transactions.
DATES: Comments must be submitted by February 22, 2011.
ADDRESSES: You may submit comments, identified by Docket No. R-____, by any of the following methods:
Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include the docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, DC 20551.
All public comments are available from the Board’s web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room MP-500 of the Board’s Martin Building (20th and C Streets, N.W.) between 9:00 a.m. and 5:00 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Dena Milligan, Attorney (202/452-3900), Legal Division, David Mills, Manager (and Economist) (202/530-6265), Division of Reserve Bank Operations & Payment Systems, Mark Manuszak, Senior Economist (202/721-4509), Division of Research & Statistics, or Ky Tran-Trong, Counsel (202/452-3667), Division of Consumer & Community Affairs; for users of Telecommunications Device for the Deaf (TDD) only, contact (202/263-4869); Board of Governors of the Federal Reserve System, 20th and C Streets, N.W., Washington, DC 20551.
SUPPLEMENTARY INFORMATION
Background
I. Section 1075 of the Dodd-Frank Act—Overview
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the ―Dodd-Frank Act‖) (Pub. L. No. 111-203, 124 Stat. 1376 (2010)) was enacted on July 21, 2010. Section 1075 of the Dodd-Frank Act amends the Electronic Fund Transfer Act (―EFTA‖) (15 U.S.C. § 1693 et seq.) by adding a new section 920 regarding interchange transaction fees and rules for payment card transactions.1
EFTA Section 920 provides that, effective July 21, 2011, the amount of any interchange transaction fee that an issuer receives or charges with respect to an electronic debit transaction must be reasonable and proportional to the cost incurred by the issuer with respect to the transaction.2 That section authorizes the Board to prescribe regulations regarding any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction and requires the Board to establish standards for assessing whether an interchange transaction fee is reasonable and proportional to the cost incurred by the issuer with respect to the transaction.
Under EFTA Section 920, the Board may allow for an adjustment to an interchange transaction fee to account for an issuer’s costs in preventing fraud, provided the issuer complies with the standards to be established by the Board relating to fraud-prevention activities. EFTA Section 920 also authorizes the Board to prescribe regulations in order to prevent circumvention or evasion of the restrictions on interchange transaction fees, and specifically authorizes the Board to prescribe regulations regarding any network fee to ensure that such a fee is not used to directly or indirectly compensate an issuer and is not used to circumvent or evade the restrictions on interchange transaction fees.
EFTA Section 920 exempts certain issuers and cards from the restrictions on interchange transaction fees described above. The restrictions on interchange transaction fees do not apply to issuers that, together with affiliates, have assets of less than $10 billion. The restrictions also do not apply to electronic debit transactions made using two types of debit cards—debit cards provided pursuant to government-administered payment programs and reloadable, general-use prepaid cards not marketed or labeled as a gift card or certificate. EFTA Section 920 provides, however, that beginning July 21, 2012, the exemptions from the interchange transaction fee restrictions will not apply for transactions made using debit cards provided pursuant to a government-administered payment program or made using certain reloadable, general-use prepaid cards if the cardholder may be charged either an overdraft fee or a fee for the first withdrawal each month from ATMs in the issuer’s designated ATM network.
In addition to rules regarding restrictions on interchange transaction fees, EFTA Section 920 also requires the Board to prescribe certain rules related to the routing of debit card transactions. First, EFTA Section 920 requires the Board to prescribe rules that prohibit issuers and payment card networks (―networks‖) from restricting the number of networks on which an electronic debit transaction may be processed to one such network or two or more affiliated networks. Second, that section requires the Board to prescribe rules prohibiting issuers and networks from inhibiting the ability of any person that accepts debit cards from directing the routing of electronic debit transactions over any network that may process such transactions.
EFTA Section 920 requires the Board to establish interchange fee standards and rules prohibiting circumvention or evasion no later than April 21, 2011. These interchange transaction fee rules will become effective on July 21, 2011. EFTA Section 920 requires the Board to issue rules that prohibit network exclusivity arrangements and debit card transaction routing restrictions no later than July 21, 2011, but does not establish an effective date for these rules.
II. Overview of the debit card industry
Over the past several decades, there have been significant changes in the way consumers make payments in the United States. The use of checks has been declining since the mid-1990s as checks (and most likely some cash payments) are being replaced by electronic payments (e.g., debit card payments, credit card payments, and automated clearing house (ACH) payments). Debit card usage, in particular, has increased markedly during that same period. After a long period of slow growth during the 1980s and early 1990s, debit card transaction volume began to grow very rapidly in the mid-1990s. Debit card payments have grown more than any other form of electronic payment over the past decade, increasing to 37.9 billion transactions in 2009. Debit cards are accepted at about 8 million merchant locations in the United States. In 2009, debit card transactions represented almost half of total third-party debits to deposit accounts, while approximately 30 percent of total third-party debits to deposit accounts were made by checks.3
In general, there are two types of debit card transactions: PIN (personal identification number)-based and signature-based.4 The infrastructure for PIN debit networks differs from that for signature debit networks. PIN debit networks, which evolved from the ATM networks, are single-message systems in which authorization and clearing information is carried in one single message. Signature debit networks, which leverage the credit card network infrastructure, are dual-message systems, in which authorization information is carried in one message and clearing information is carried in a separate message. In the current environment, certain transactions cannot readily be accommodated on PIN-based, single-message systems, such as transactions for hotel stays or car rentals, where the exact amount of the transaction is not known at the time of authorization. In addition, PIN debit transactions generally are not accepted for Internet transactions. Overall, roughly one-quarter of the merchant locations in the United States that accept debit cards have the capability to accept PIN-based debit transactions. According to the Board’s survey of covered card issuers, roughly 70 percent of debit cards outstanding (including prepaid cards) support both PIN- and signature-based transactions (87 percent, excluding prepaid cards).5
Networks that process debit card transactions exhibit two main organizational forms, often referred to as three-party and four-party systems.6 The so-called four-party system is the model used for most debit card transactions; the four parties are the cardholder, the entity that issued the payment card to the cardholder (the issuer), the merchant, and the merchant’s bank (the acquirer or merchant acquirer).7 The network coordinates the transmission of information between the issuing and acquiring sides of the market (authorization and clearing) and the interbank monetary transfers (settlement).8
In a typical three-party system, the network itself acts as both issuer and acquirer. Thus, the three parties involved in a transaction are the cardholder, the merchant, and the network. Three-party systems are also referred to as ―closed,‖ because the issuer and acquirer are generally the same institution—they have, thus, tended to be closed to outside participants. The three-party model is used for some prepaid card transactions, but not for other debit card transactions.
In a typical four-party system transaction, the cardholder initiates a purchase by providing his or her card or card information to a merchant. In the case of PIN debit, the cardholder also enters a PIN. An electronic authorization request for a specific dollar amount and the cardholder’s account information is sent from the merchant to the acquirer to the network, which forwards the request to the card-issuing institution.9 The issuer verifies, among other things, that the cardholder’s account has sufficient funds to cover the transaction amount and that the card was not reported as lost or stolen. A message authorizing (or declining) the transaction is returned to the merchant via the reverse path.
The clearing of a debit card transaction is effected through the authorization message (for PIN debit systems) or a subsequent message (for signature debit systems). The issuer posts the debits to the cardholders’ accounts based on these clearing messages. The network calculates and communicates to each issuer and acquirer its net debit or credit position to settle the day’s transactions. The interbank settlement generally is effected through a settlement account at a commercial bank, or through automated clearinghouse (ACH) transfers. The acquirer credits the merchant for the value of its transactions, less the merchant discount, as discussed below.
There are various fees associated with debit card transactions. The interchange fee is set by the relevant network and paid by the merchant acquirer to the issuer. Switch fees are charged by the network to acquirers and issuers to compensate the network for its role in processing the transaction.10 The merchant acquirer charges the merchant a merchant discount—the difference between the face value of a transaction and the amount the merchant acquirer transfers to the merchant–that includes the interchange fee, network switch fees charged to the acquirer, other acquirer costs, and an acquirer markup. The interchange fee typically comprises a large fraction of the merchant discount for a card transaction.
When PIN debit networks were first introduced, some of them structured interchange fees in a manner similar to ATM interchange fees.11 For ATM card transactions, the cardholder’s bank generally pays the ATM operator an interchange fee to compensate the ATM operator for the costs of deploying and maintaining the ATM and providing the service. Similarly, some PIN debit networks initially structured interchange fees to flow from the cardholder’s bank to the merchant’s bank to compensate merchants for the costs of installing PIN terminals and making necessary system changes to accept PIN debit at the point of sale. In the mid-1990s, these PIN debit networks began to shift the direction in which PIN debit interchange fees flowed. By the end of the decade, all PIN debit interchange fees were paid by acquirers to card issuers.12
During the 1990s, most PIN debit networks employed fixed per-transaction interchange fees. Beginning around 2000, many PIN debit networks incorporated an ad valorem (i.e., percentage of the value of a transaction) component to their interchange fees, with a cap on the total amount of the fee for each transaction. In addition, PIN debit networks expanded the number of interchange fee categories in their fee schedules. For example, many networks created categories based on type of merchant (e.g., supermarkets) and began to segregate merchants into different categories based on transaction volume (e.g., transaction tiers). Over the course of the 2000s, most PIN debit networks raised the levels of fixed component fees, ad valorem fees, and caps on these fees. By 2010, some networks had removed per-transaction caps on many interchange fees.
In general, interchange fees for signature debit networks, like those of credit card networks, combine an ad valorem component with a fixed fee component. Unlike some PIN debit networks, the interchange fees for signature debit networks generally do not include a per transaction cap. Beginning in the early 1990s, signature debit networks also began creating separate categories for merchants in certain market segments (e.g., supermarkets and card-not-present transactions)13 to gain increased acceptance in those markets. Until 2003, signature debit interchange fees were generally around the same level as credit card interchange fees and have generally been significantly higher than those for PIN debit card transactions. PIN debit fees began to increase in the early 2000s, while signature debit fees declined in late 2003 and early 2004.14 More recently, both PIN and signature debit fees have increased, although PIN debit fees have increased at a faster pace.
In addition to setting the structure and level of interchange fees and other fees to support network operations, each card network specifies operating rules that govern the relationships between network participants. Although the network rules explicitly govern the issuers and acquirers, merchants and processors also may be required to comply with the network rules or risk losing access to that network. Network operating rules cover a broad range of activities, including merchant card acceptance practices, technological specifications for cards and terminals, risk management, and determination of transaction routing when multiple networks are available for a given transaction.
III. Outreach and information collection
A. Summary of outreach
Since enactment of the Dodd-Frank Act, Board staff has held numerous meetings with debit card issuers, payment card networks, merchant acquirers, merchants, industry trade associations, and consumer groups. In general, those parties provided information regarding electronic debit transactions, including processing flows for electronic debit transactions, structures and levels of current interchange transaction fees and other fees charged by the networks, fraud-prevention activities performed by various parties to an electronic debit transaction, fraud losses related to electronic debit transactions, routing restrictions, card-issuing arrangements, and incentive programs for both merchants and issuers. Interested parties also provided written submissions.15
B. Surveys
On September 13, 2010, the Board distributed three surveys to industry participants (an issuer survey, a network survey, and a merchant acquirer survey) designed to gather information to assist the Board in developing this proposal. Industry participants, including payment card networks, trade groups and individual firms from both the banking industry and merchant community, commented on preliminary versions of the issuer and network surveys, through both written submissions and a series of drop-in calls. In response to the comments, the two surveys were modified, as appropriate, and an additional survey of merchant acquirers was developed.16
The card issuer survey was distributed to 131 financial organizations that, together with affiliates, have assets of $10 billion or more.17 The Board received 89 responses to the survey. An additional 13 organizations informed the Board that they do not have debit card programs. Three organizations that issued a small number of cards declined to participate in the survey. The Board did not receive any communication from the other 26 organizations. The network survey was distributed to the 14 networks believed to process debit card transactions, all of which provided responses. The merchant acquirer survey was distributed to the largest nine merchant acquirers/processors, all of whom responded to the survey.
Information Requested & Summary Results
In general, the surveys requested information on signature debit, PIN debit and prepaid card operations and, for each card type, the costs associated with those card types, interchange fees and other fees established by networks, fraud losses, fraud-prevention and data-security activities, network exclusivity arrangements and debit-card routing restrictions. The Board compiled the survey responses in a central database, and reviewed the submissions for completeness, consistency, and anomalous responses. As indicated above, the response rates for the three surveys were high; however, some respondents were not able to provide information on all data elements requested in the surveys. For example, most respondents provided cost data at an aggregate level, but some were unable to provide cost data at the level of granularity requested in the surveys. In addition, there were inconsistencies in some data that were reported within individual responses and across responses. Therefore, each of the summary statistics reported below may be based on a subset of the responses received for each of the three surveys. The reporting period for each survey was calendar year 2009, unless otherwise noted.
Card use. The networks reported that there were approximately 37.7 billion debit and prepaid card transactions in 2009, valued at over $1.45 trillion, with an average value of $38.58 per transaction.18,19,20 Responding issuers reported that, on average, they had 174 million debit cards and 46 million prepaid cards outstanding during 2009. Eighty-seven percent of debit cards and 25 percent of prepaid cards were enabled for use on both signature and PIN networks. Four percent of debit cards and 74 percent of prepaid cards were enabled for use on signature networks only. Finally, 9 percent of debit cards and 1 percent of prepaid cards were enabled for use on PIN networks only. Responding acquirers reported that 6.7 million merchant locations were able to accept signature debit cards and 1.5 million were able to accept PIN debit cards.21
Interchange fees. Networks reported that debit and prepaid interchange fees totaled $16.2 billion in 2009.22 The average interchange fee for all debit transactions was 44 cents per transaction, or 1.14 percent of the transaction amount. The average interchange fee for a signature debit transaction was 56 cents, or 1.53 percent of the transaction amount. The average interchange fee for a PIN debit transaction was significantly lower than that of a signature debit transaction, at 23 cents per transaction, or 0.56 percent of the transaction amount. Prepaid card interchange fees were similar to those of signature debit, averaging 50 cents per transaction, or 1.53 percent of the transaction amount.23
Processing costs. Issuers reported their per-transaction processing costs, which are those costs related to authorization, clearance, and settlement of a transaction.24 The median per-transaction total processing cost for all types of debit and prepaid card transactions was 11.9 cents.25 The median per-transaction variable processing cost was 7.1 cents for all types of debit and prepaid card transactions.26 The median per-transaction network processing fees were 4.0 cents for all types of debit and prepaid card transactions.27
Network fees. Networks reported charging two types of per-transaction fees: processing and non-processing fees. Networks also reported charging fees other than on a per-transaction basis. Networks charged issuers a total of $2.3 billion in fees and charged acquirers a total of $1.9 billion in fees. In general, the proportion of fees paid by each party varied by network type. Aggregating these fees across all debit and prepaid card transactions, the average network fee attributable to each transaction was 6.5 cents for issuers and 5.0 cents for acquirers. The average network fee attributable to each signature debit transaction was 8.4 cents for issuers and 5.7 cents for acquirers. Thus, about 60 percent of signature debit network fees were paid by issuers and 40 percent by acquirers. For PIN debit transactions, the average network fee attributable to each transaction was 2.7 cents for issuers and 3.7 cents for acquirers. Thus, about 42 percent of PIN debit network fees were paid by issuers and 58 percent by acquirers. As noted above, these fees include per-transaction processing fees and non-processing fees, as well as other fees. Based on data reported by responding issuers, signature debit network processing fees were 3.0 cents per transaction on average and PIN debit network processing fees were 1.6¢ per transaction on average.
Networks also reported providing discounts and incentives to issuers and acquirers/merchants. Issuers were provided discounts and incentives totaling $0.7 billion, or an 29 average of 2.0 cents per transaction, while acquirers were provided discounts and incentives of $0.3 billion, or an average of 0.9 cents per transaction. Signature debit networks provided average incentives and discounts of 2.6 cents per transaction to issuers and 1.2 cents per transaction to acquirers. Thus, 69 percent of signature debit network incentives and discounts were provided to issuers and 31 percent to acquirers. PIN debit networks provided average incentives and discounts of 0.7 cents per transaction to issuers and 0.5 cents per transaction to acquirers. Thus, 61 percent of PIN debit network incentives and discounts were provided to issuers and 39 percent to acquirers.
Discounts and incentives effectively reduce the per-transaction amount of network fees each party pays. After adjusting for discounts and incentives, the average net network fee per transaction is 4.5 cents for issuers and 4.1 cents for acquirers.28 For signature debit transactions, the average net network fee per transaction is 5.9 cents for issuers and 4.5 cents for acquirers. Thus, 57 percent of net network fees on signature networks were paid by issuers and 43 percent by acquirers. For PIN debit networks, the average net network fee per transaction is 1.9 cents for issuers and 3.2 cents for acquirers. Thus, 37 percent of net network fees on PIN debit networks were paid by issuers and 63 percent by acquirers.
Fraud data. Survey responses on fraud occurrence, fraud losses, and fraud-prevention and data-security costs are discussed in section IV of this notice.
Exclusivity arrangements and routing restrictions. The surveys also included a number of questions about exclusivity arrangements and transaction routing procedures. Respondents reported that there are arrangements, either rules-based or contractual, under which transactions must be routed exclusively over specific networks or that commit issuers to meet certain volume
1 Section 920 is codified in 15 U.S.C. 1693o-2. As discussed in more detail below, interchange transaction fees (or ―interchange fees‖) are fees established by a payment card network, charged to the merchant acquirer and received by the card issuer for its role in transaction.
2 Electronic debit transaction (or ―debit card transaction‖) means the use of a debit card, including a general-use prepaid card, by a person as a form of payment in the United States.
3Third-party debits are those debits initiated to pay parties other than the cardholder. These third-party debit numbers are derived from the 2010 Federal Reserve Payments Study. The Study reported that a total of 108.9 billion noncash payments were made in 2009, 35 percent of which were debit card payments. For purposes of determining the proportion of noncash payments that were third-party debits to accounts, ATM cash withdrawals and prepaid card transactions are excluded from the calculation. A summary of the 2010 Federal Reserve Payments Study is available at http://www.frbservices.org/files/communications/pdf/press/2010_payments_study.pdf.
4 Increasingly, however, cardholders authorize ―signature‖ debit transactions without a signature and, sometimes, may authorize a ―PIN‖ debit transaction without a PIN. PIN-based and signature-based debit also may be referred to as ―PIN debit‖ and ―signature debit.‖
5 ―Covered issuers‖ are those issuers that, together with affiliates, have assets of $10 billion or more.
6 Industry participants sometimes refer to four-party systems as ―open loop‖ systems and three-party systems as ―closed loop‖ systems.
7 Throughout this proposed rule, the term ―bank‖ often is used to refer to depository institutions.
8 The term ―four-party system‖ is something of a misnomer because the network is, in fact, a fifth party involved in a transaction.
9 Specialized payment processors may carry out some functions between the merchant and the network or between the network and the issuer.
10 A variety of other network fees may be collected by the network from the issuer or acquirer.
11 In the late 1970s, bank consortiums formed numerous regional electronic funds transfer ("EFT") networks to enable their customers to withdraw funds from ATMs owned by a variety of different banks. The EFT networks were first used to handle PIN debit purchases at retailers in the early 1980s. It was not until the mid-1990s, however, that PIN debit became a popular method of payment for consumers to purchase goods and services at retail stores.
12 Debit Card Directory (1995–1999). See also, Fukimo Hayashi, Richard Sullivan, & Stuart E. Weiner, ―A Guide to the ATM and Debit Card Industry‖ (Federal Reserve Bank of Kansas City 2003).
13 Card-not-present transactions occur when the card is not physically presented to the merchant at the time of authorization. Examples include Internet, phone, and mail-order purchases.
14 This decline followed the settlement of litigation surrounding signature debit cards. See In re: Visa Check/MasterMoney Antitrust Litigation, 192 F.R.D. 68 (F.D.N.Y. 2000).
15 The meeting summaries and written submissions are available on the Regulatory Reform section of the Board’s website, available at http://www.federalreserve.gov/newsevents/reform_meetings.htm.
16 Documentation and forms for the card issuer, payment card network, and merchant acquirer surveys are respectively available at http://www.federalreserve.gov/newsevents/files/card_issuer_survey_20100920.pdf, http://www.federalreserve.gov/newsevents/files/payment_card_network_survey_20100920.pdf, and http://www.federalreserve.gov/newsevents/files/merchant_acquirer_survey_20100920.pdf.
17 These institutions include bank and thrift holding companies with assets of at least $10 billion; independent commercial banks, thrifts, and credit unions with assets of at least $10 billion; and FDIC-insured U.S. branches and agencies of foreign banking organizations with worldwide assets of at least $10 billion. Assets were computed using the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C; OMB No. 7100-0128), the Consolidated Reports of Condition and Income (Call Reports) for independent commercial banks (FFIEC 031 & 041; OMB No. 7100-0036) and for U.S. branches and agencies of foreign banks (FFIEC 002; OMB No. 7100-0032), the Thrift Financial Reports (OTS 1313; OMB No. 1550-0023) for Thrift Holding Companies and thrift institutions, and the Credit Union Reports of Condition and Income (NCUA 5300/5300S; OMB No. 3133-0004) for credit unions. The ownership structure of banking organizations was established using the FFIEC’s National Information Center structure database.
20 The recently released 2010 Federal Reserve Payments Study reported 6.0 billion prepaid card transactions in 2009, of which 1.3 billion were general purpose prepaid card transactions and 4.7 billion were private label prepaid card and electronic benefit transfer card transactions that were not included in the Board survey.
21 These numbers differ from the estimates that were otherwise provided to the Board by major payment card networks, card issuers, and merchant acquirers.
22 Of the $16.2 billion in interchange-fee revenue, $12.5 billion was for signature debit transactions, $3.2 billion was for PIN debit transactions and $0.5 billion was for prepaid card transactions. The responding issuers reported receiving $11.0 billion, or about 68 percent of total interchange fees.
23 The network survey also requested information on historical interchange fees. Not all networks reported historical interchange fees back to 1990. However, from 1990 to 2009, it appears that interchange fees for signature debit transactions generally were around 1.5 percent of transaction value. Based on other industry resources, interchange fees on PIN debit transactions in the late 1990s were about 7 cents per transaction (Debit Card Directory, 1995 – 1999). Therefore, it appears that these fees rose significantly during the 2000s.
24 Unlike other statistics in this discussion, the Board discusses cost information using percentiles within this Federal Register Notice to avoid having summary measures distorted by extreme values in the sample cost data.
25 By transaction type, the median total per-transaction processing cost was 13.7 cents for signature debit, 7.9 cents for PIN debit and 63.6 cents for prepaid cards.
26 By transaction type, the median variable per-transaction processing cost was 6.7 cents for signature debit, 4.5 cents for PIN debit, and 25.8 cents for prepaid cards.
27 By transaction type, the median per-transaction network processing fees were 4.7 cents for signature debit, 2.1 cents for PIN debit, and 6.9 cents for prepaid cards.
28 Net network fees paid by issuers and acquirers were calculated by subtracting incentives and discounts provided from network fees paid.
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