New data from the Federal Reserve Board illustrate the incredible impact new interchange regulations have had on the cost of debit network transactions.
In 2009, debit networks charged 2.4 times as much to process signature debit transactions as they did for PIN transactions. As of the fourth quarter of 2011, that difference has been erased — PIN transactions are now just two percent more costly, the Board says.
Overall, the average interchange fees charged by institutions subject to the regulations dropped from 43 cents in 2009 to 24 cents in the fourth quarter of 2011. (For institutions exempt from new regulations, the average fee did not change.)
Essentially all of the fee reductions came in the form of reduced prices on signature debit transactions. At institutions subject to the regulations, signature fees came down 57 percent, while PIN fees were lowered by just one percent on average. (At exempt institutions, signature fees fell eight percent, while PIN fees actually increased 32 percent.)
The Board also provided detailed information on the interchange fees charged by each debit payment network. Of note, MasterCard and Visa have each reduced their average signature debit fees by roughly 35 cents since the regulations took effect.
Download detailed debit fee information here, courtesy of the Federal Reserve Board.