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Press Release
May 23, 2013

Exemption for small debit card issuers from
interchange fee standards working as intended
For immediate release
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The exemption designed to protect small debit card issuers from
interchange fee standards applied to large issuers is working as
intended, a Federal Reserve Board report released Thursday showed.
Small depository institutions with consolidated assets of less than $10
billion, which are exempt from the interchange fee standard in
Regulation II, received fee revenue of 43 cents per transaction in 2012.
This amount is roughly the same as the average per-transaction fee
received by exempt issuers before Regulation II took effect. In addition,
most small issuers that responded to a survey about the effect of the
network exclusivity provisions of the rule indicated that significant
compliance costs were not incurred.
Data collected from payment card networks reveal that all of the
networks provided a higher average interchange fee to exempt issuers
than non-exempt issuers in 2012. The average interchange fee per
signature debit transaction for exempt issuers was slightly more than
double that for non-exempt issuers. The average interchange fee per
PIN debit transaction for exempt issuers was 1.3 times greater than that
for non-exempt issuers. Exempt issuers received $7.4 billion in total
debit card interchange revenue in 2012, compared with approximately
$5.3 billion in debit card interchange revenue in 2009.
Data collected from small issuers reveal that about 16 percent of

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respondents had to incur costs to comply with the network exclusivity
provisions of Regulation II, which require issuers to enable two
unaffiliated debit card networks on each debit card. Those issuers that
incurred compliance costs reported an average initial cost of 72 cents
per card and average projected ongoing annual costs of $1.19 per card
to come into compliance. Only three of the small issuers that responded
to the survey indicated that their cardholders complained of having their
debit cards discriminated against by merchants, although it is not clear
that any complaints were directly due to the fact that the cards were
exempt from the interchange fee standard.
For media inquiries, call 202-452-2955.
Impact of Regulation II on Small Debit Card Issuers, May 2013 (PDF)
Regulation II (Debit Card Interchange Fees and Routing)

Last Update: May 23, 2013

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BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM
20th Street and Constitution Avenue N.W., Washington, DC 20551