PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Fed Defends Debit-Fee Cap Calcs

By Sarah Grotta
August 12, 2015
in Analysts Coverage
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

It is hard to believe that it has been 5 years since the Durbin Amendment was introduced and harder yet to believe that the fee caps on interchange that were established are still unsettled and we are still talking about it.

A lawsuit was filed by the National Association of Convenience Stores that claimed, among other things, the Fed a used flawed methodology to calculate the fee limit.

In response to that, The Fed published a multi-page explanation of how they arrived at the decision for $.21 plus 5 basis points per transaction and a fraud-prevention adjustment of $0.01 that issuers may receive if they adopt certain activities.

The NACS argued those costs, which issuers incur during authorization to detect fraud or other irregularities, shouldn’t be part of the math used to determine the standard interchange fee, because they’re actually fraud-prevention tools and aren’t specific to particular debit transactions
On Monday, the Secretary of the Board Robert deV. Frierson explained the rationale behind the Fed’s math:
“Transactions-monitoring systems, such as neural networks and fraud-risk scoring systems, assist in the authorization process by providing information needed by the issuer in deciding whether the issuer should authorize the transaction before the issuer decides to approve or decline the transaction,” Frierson wrote. “In fact, most costs of the authorization process (which are costs Congress required to be considered in determining the interchange fee) assist in preventing some type of fraud.”

Something tells me the conversation about the Durbin Amendment is still not over.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

Read the full story here

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025
    agentic commerce

    The Agentic Advent: How the Next Iteration of AI is Shaping Commerce

    June 6, 2025
    payments hub, digital banking

    All in One: How a Payments Hub Eliminates the Pain Points

    June 5, 2025
    Vertical SaaS

    From Underdogs to Industry Leaders: How Vertical SaaS Powers Mid-Sized Firms

    June 4, 2025
    credit card surcharging

    A Perfectly Understandable Bad Idea: Why Merchants Should Reconsider Surcharging

    June 3, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result