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Board of Governors of the Federal Reserve System

2009 Interchange Revenue, Covered Issuer Cost, and Covered Issuer
and Merchant Fraud Loss Related to Debit Card Transactions

June 2011

I. Overview
Section 920 of the Electronic Fund Transfer Act (as added by Section 1075 of the DoddFrank Wall Street Reform and Consumer Protection Act) requires the Board to disclose "...
aggregate or summary information concerning the costs incurred, and the interchange transaction
fees charged or received, by issuers or payment card networks in connection with the
authorization, clearance or settlement of electronic debit transactions as the Board considers
appropriate and in the public interest."

The Act authorizes the Board to collect such

information from issuers and payment card networks as may be necessary to implement the
debit-card interchange fee standards required under that section.
In September 2010, the Board surveyed issuers that would be subject to the interchange
fee standard and payment card networks to gather information to assist the Board in developing
its proposed rule to implement Section 920. Industry participants, including payment card
networks, depository institutions, merchants, and their trade groups, commented on preliminary
versions of the survey instruments, through both written submissions and a series of drop-in
calls. In response to the comments, the survey instruments were modified, as appropriate.
The network survey was distributed to 16 networks that process debit card transactions,
all of which provided responses. The network survey asked for information related to the
volume and value of debit card transactions, interchange fees charged by networks to merchant
acquirers and paid to issuers, including information on historical interchange fees, and network

[Note:] 1

EFTA § 920(a)(3)(B), 12 USC § 1693o-2(a)(3)(B).[endofnote.]
The Board also surveyed the nine largest merchant acquirers, all of whom responded to the survey and provided
information on the number and volume of debit card transactions that they processed, the number of merchants that
accepted various types of debit cards, fraud losses, fraud prevention activities and costs, and exclusivity
arrangements and routing procedures.[endofnote.]
[Note:] 3
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.[endofnote.]
[Note:] 2

fees charged by networks to both issuers and acquirers. The survey also asked for information
regarding fraud losses, fraud prevention activities and costs, and exclusivity arrangements and
routing procedures.
The card issuer survey was distributed to 131 financial institutions that, together with
affiliates, had assets of $10 billion or more as of year-end 2009. 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.
The card issuer survey asked for information related to the volume and value of debit
card transactions processed, interchange fee revenue, and various costs associated with
processing debit card transactions and operating a debit card program. The survey also asked for
information regarding fraud losses and fraud prevention activities and costs. The reporting
period for the survey was calendar year 2009.
Of the 131 covered financial institutions, 89 returned a card issuer survey, 13 indicated
that they did not issue debit cards, 3 indicated they issued a small number of cards and declined
to respond otherwise, and 26 provided no response at all. Out of the 89 responses, 66 issuers
reported purchase transactions volumes and values, which are critical data elements for many of
the estimates provided. The 66 respondents to the card issuer survey represent only a small
fraction of an estimated 12,400 debit card issuers in the United States, but account for about 57
percent of total debit card transaction volume and 60 percent of total debit card transactions

[Note:] 4

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. 31330004) for credit unions. The ownership structure of banking organizations was established using the FFIEC's
National Information Center structure database.[endofnote.]

value as reported in the network survey.

The issuer respondents range from the largest debit

card issuers in the country to issuers with very small debit card programs.
In general, the surveys instructed respondents to provide the requested information
separately for signature debit, PIN (personal identification number) debit, and prepaid card
operations. For the purposes of the survey, a signature debit card program provides access to
funds in a cardholder's asset account for point-of-sale or other purchase transactions through use
of a debit card, payment code, or other device, in which the access is not authorized through the
use of a PIN. A PIN debit card program provides access to funds in a cardholder's asset account
for point-of-sale or other purchase transactions through use of a debit card, payment code, or
other device, in which the access is generally authorized through the use of a personal
identification number or code. Cards that can access only ATM networks and cannot be used to
make point-of-sale transactions were excluded from the survey.
The survey requested information on prepaid card programs, which provide access to
prepaid funds held in an account that may be used for point-of-sale or other purchase
transactions through use of a prepaid card, payment code, or other device. The survey collected
data for general-use reloadable and non-reloadable prepaid cards and for government and nongovernment prepaid programs; therefore, the survey information includes data for certain
programs that are exempt from the interchange fee standard. For purposes of prepaid card
programs that use an omnibus account, the survey instructed respondents that an "account" refers
to each cardholder's sub-account and not to the omnibus account in which funds for each of the
sub-accounts are held.

[Note:] 5

The estimate of 12,400 debit card issuers was based on information provided by the recently released 2010 Federal
Reserve Payments Study (http://frbservices.org/communications/payment_system_research.html).[endofnote.]
[Note:] 6
Issuers with very small debit card programs were covered by the survey because the size of their affiliates was
sufficient to push these programs over the $10 billion or more of consolidated assets.[endofnote.]

The Board compiled the survey responses in a central database and reviewed the
submissions for completeness, consistency, and anomalous responses. Inconsistencies existed in
some reported data within individual responses and across responses. Where possible, minor
problems were resolved, but responses with major problems were not used.
The number of usable responses for a given cost calculation varied from one third to two
thirds, but in general, about half of the returned surveys contained sufficient information to
compute the summary statistics reported below. Although the response rates for the surveys
were high, most respondents did not provide information on every data element 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 detail requested in the surveys.

The summary

statistics reported below are based on subsets with different compositions of respondents, and the
data for the component parts may not sum to the total within a particular category. Likewise, the
summary statistics generally cannot be combined or compared across tables due to differences in
the composition of respondents.
The Board provided preliminary data on the items that follow in its discussion of its
proposed Regulation II.

Since that time, Board staff has further analyzed the data and resolved

a number of minor problems, changing the number of usable responses for some of the
calculations. Therefore, in certain instances, some data reported in the initial proposal have
changed. In most instances, these changes are minor. Any major differences will be noted in the
text.
II. Card Use
As mentioned above, each of the surveys asked for information pertaining to the number
and value of debit card transactions. These calculations exclude ATM transactions, chargebacks,
[Note:] 7

75 FR 81724-81726 and 81740-81742 (December 28, 2010).[endofnote.]

and any event in which value was not transferred between a cardholder and a merchant, such as
denials, errors, or authorizations that did not clear or were not presented for settlement. For
prepaid cards, these calculations exclude funds loads to cards.
Table 1 provides summary information on the total volume, total value, and average
value of both purchase and return transactions as reported by the networks.

There were

approximately 37.6 billion debit and prepaid card purchase transactions in 2009, with an
aggregate value of more than $1.4 trillion. Signature-based transactions accounted for 22.5
billion or 60 percent of all purchase transactions, and $837 billion or 59 percent of transaction
value. PIN-based debit transactions totaled 13.9 billion or 37 percent of purchase transactions,
and $555 billion or 39 percent of transaction value. Prepaid transactions represented 1.2 billion
or 3 percent of purchase transactions and $38 billion or 3 percent of purchase transaction value. 10
The average value of all purchase transactions was $38.03, with the average values of
signature debit, PIN debit, and prepaid card transactions being $37.15, $40.03, and $31.47,
respectively.
There were more than 320 million returns, or less than 1 percent of all purchase
transactions in 2009, with a total value of $17.3 billion or about 1.2 percent of the value of all
purchases. About 88 percent of the total value of returns was signature debit returns.
Approximately 1.2 percent of all signature purchases were returned, compared to about 0.3

[note:] 8

In a purchase transaction, value is transferred from the cardholder to the merchant in exchange for goods or
services. In a return transaction, the merchant reverses a purchase transaction (due, for example, to the return of
goods by the cardholder), and value is transferred from the merchant to the cardholder.
[note:] 9
Three signature networks and thirteen PIN networks, including the affiliated PIN network of each of the signature
networks, responded to the survey. Four signature and PIN networks reported data on prepaid cards. All networks
reported information on transaction volume. However, one small PIN network did not provide information on
transaction value. The average transaction value in Table 1 is based on the complete responses for volume and
value.[endofnotes.]
[note:] 10
The recently released 2010 Federal Reserve Payments Study
(http://frbservices.org/communications/payment_system_research.html) 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.[endofnote.]

percent of all PIN purchase transactions, and 1 percent of all prepaid purchases. About 1.8
percent of all signature purchase value, 0.3 percent of all PIN purchase value, and 1 percent of all
prepaid value were returned.
Table 2 presents the proportion of transaction volume and value as reported by payment
card networks where the card was present and not present.

More than 90 percent of all

transactions, and 80 percent of the value, are card-present transactions. Only 1 percent of PIN
debit transactions were card-not-present transactions, representing about 4 percent of related
transaction value.

In contrast, about 14 percent of all signature transactions and 17 percent of

all prepaid transactions, and about 30 percent and 32 percent of the value of these transactions,
respectively, are in the card-not-present environment.
III. Interchange Fees
Interchange fees are those fees set by the network, charged to acquirers and received by
debit card issuers as part of a debit card transaction. The acquirer typically passes these fees on
to the merchants, so interchange fees can be thought of as a cost to merchants and as revenue to
debit card issuers.
Table 3 provides summary information about interchange fees received by issuers, as
reported by payment card networks.

Networks reported that debit card (and prepaid card)

interchange fees totaled $16.2 billion in 2009. Of this 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.
[note:] 11

Card-present transactions are those in which the card was physically present at the time of purchase, including
both in-person and automated kiosk transactions. Card-not-present transactions are those in which the card was not
physically present at the time of purchase. Most card-not-present transactions are Internet, telephone, or mail order
transactions.[endofnote.]
[note:] 12
Most Internet, telephone, and mail merchants do not accept PIN debit transactions. PIN acceptance on the
Internet is mostly limited to online payments of utility and other recurring bills.[endofnote.]
[note:]13Interchange fees as a percentage of transaction value excludes the one PIN debit network that did not report
transaction values.[endofnote.]

The average interchange fee for all debit transactions was 44 cents per transaction, or
1.15 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, at 23 cents per transaction, or 0.58 percent of
the transaction amount. Prepaid card interchange fees were more similar to those of signature
debit, averaging 40 cents per transaction, or 1.28 percent of the transaction amount.
IV. Processing Costs
Issuers reported their processing costs related to authorization, clearance, and settlement
of a transaction.

The issuer survey instructed respondents to separate costs into fixed cost and

variable cost components.
processing.

Respondents were asked to report separately network fees related to

For each cost component, the ratio of processing costs to purchase transactions

yielded a per transaction value of that cost component for each issuer.
Table 4 presents various statistics for the processing costs related to signature, PIN, and
prepaid transactions, and processing costs of all three types of transactions combined. The
statistics include a mean per transaction, a mean per respondent, the standard deviation related to
the mean per respondent, and various percentiles for each card program's fixed, variable,
[note:] 14

Some of these numbers differ from those published in the Federal Register notice of proposed Regulation II (75
FR 81725, December 28, 2010) because several networks subsequently submitted corrections to previously provided
data. In one instance, a network corrected the number of prepaid transactions and PIN debit transactions.[endofnote.]
[note:]
15
The survey in
processing, connectivity, and voice authorization/referral inquiries costs. The survey instructions included as
clearance and settlement costs 1) the costs of interbank clearing and settlement, defined as the total costs associated
with receiving, verifying, reconciling, and settling transactions with other financial institutions, and 2) the total costs
associated with posting transactions to cardholders' accounts. Issuers were instructed to also report processing costs
associated with chargebacks and errors.[endofnote.]
[note:] 16
The survey defined fixed costs as costs that do not vary with changes in the number or value of transactions over
the course of the reporting period. For example, the cost of connectivity typically would be a fixed cost over the
course of the reporting period, as would service subscription fees. The survey defined variable costs as costs that
directly vary with the number or value of transactions.[endofnote.]
[note:] 17
Network fees are switch fees or other fees charged by card networks for services that are required for the
processing of transactions. They do not include any fees for optional services related to transaction processing that
may be provided by a card network or an affiliate of a card network, nor do they include any network fees that are
not directly linked to the processing of transactions, such as membership or license fees.[endofnote.]

network, and total processing costs.

Because the number of respondents varies across the

categories, the sum of the various cost components often does not add up to the total processing
costs.
The mean per transaction total processing cost for all types of debit card (including
prepaid card) transactions was 8 cents, the mean per respondent was 17 cents, and the median
was 11 cents. For signature debit, the mean per transaction, mean per respondent, and median
were 8, 18, and 13 cents, respectively. For PIN debit, the comparable values were 5, 13, and 8
cents, respectively. Prepaid card transactions had the highest costs, with the mean per
transaction at 22 cents, the mean per respondent at 96 cents, and the median at 61 cents.
The survey asked issuers to separately report their processing costs that were incurred inhouse and costs associated with services provided by a third party. 20 Table 5 provides
responding issuer average costs associated with in-house activities, and those outsourced to a
third-party processor. It also provides cost information related to network fees and total
processing costs. Overall, in-house costs incurred by the issuer represent 39 percent of total

[note:] 18

The mean per transaction is defined as the sum of all respondents' reported costs for a particular cost category
divided by the sum of all respondents' reported purchase transactions. This calculation corresponds to the weighted
average of costs across respondents, where the weight for each respondent is its share of total volume. The mean
per respondent is the average ratio of each respondent's reported cost for a particular category to its purchase
transactions. The standard deviation is around the mean per respondent. The percentiles are based on each
respondent's ratio of reported cost for a particular category to its purchase transactions.[endofnote.]
[note:]
19
For example, some issuers reported
report fixed and variable costs. A number of issuers of prepaid cards reported that they did not know the specific
costs associated with their prepaid card program. In some cases those issuers provided more complete data for their
signature and PIN programs. In those cases, for "All Transaction Types" in the tables below, the issuer's signature
and PIN purchase transactions and costs are included, but its prepaid purchase transactions and costs are excluded.[endofnote.]
[note:] 20
The survey defined third-party fees as payments by the issuer to external service providers for processing
activities that are performed by those service providers on behalf of the issuer. Service providers may include card
networks or affiliates of card networks to the extent that an issuer contracts with such parties for provision of
optional services related to transaction processing. Respondents were instructed not to include switch fees or other
fees charged by a card network for services that are required for the processing of transactions; these costs should
have been reported as network processing fees. In-house costs are defined to be costs incurred for processing
activities that are not outsourced to third parties.[endofnote.]

processing costs; transaction processing fees paid to third-party processors and networks
represent 29 and 33 percent of the total processing costs, respectively.
V. Card Program Costs (Other than Authorization, Clearance, and Settlement Costs)
The issuer survey also asked respondents to report debit card program costs other than
processing costs, such as the costs of card production and delivery, cardholder inquiries, rewards
and other incentives, network fees unrelated to processing transactions, research and
development, non-sufficient funds handling, and compliance.

Table 6 presents various statistics

on these card program costs related to signature, PIN, and prepaid debit cards, and all three types
of transactions combined. As in Table 4, the statistics include a mean per transaction, a mean per
respondent, the standard deviation related to the mean per respondent, and various percentiles for
each card program's other costs.
The two categories of program costs that typically had the highest mean per transaction
and mean per respondent costs were cardholder inquiries (7 cents and 4 cents, respectively, for
all types of debit card transactions) and rewards and other incentives (4 cents and 5 cents,
respectively, for all types of debit card transactions). Costs associated with rewards and other

[note:] 21

Card production and delivery costs are those costs associated with producing and delivering cards to cardholders
and include costs for issuance of cards to new cardholders and routine reissuance of cards to existing cardholders.
Costs associated with cardholder inquiries are limited to costs associated with inquiries regarding specific
transactions, including inquiries associated with fee waivers, transaction details, transaction fees, cardholder
disputes, and other issues related to card transaction activity. It does not include costs of chargeback processes that
result from cardholder inquiries or the costs of handling general card or account inquiries. Rewards and other
incentives costs relate to the costs associated with cardholder reward programs or other incentive payment programs
that result from activity of debit card programs. Included are the costs of program administration, rewards, and
affinity partner revenue-sharing. Network fees unrelated to the processing of transactions include membership or
license fees, but exclude network fees that are directly attributable to transactions processing, which are reported
separately. Research and development costs include the costs related to product enhancements, process
improvements, product development, and testing. They do not include any research and development costs
associated with fraud prevention activities, which are reported separately. Costs associated with non-sufficient funds
handling are the costs resulting from an account having insufficient funds to settle an authorized debit card
transaction. They include customer service costs, costs of collection activities, and costs of reporting the account to
credit agencies. They do not include the amount of or losses from such transactions. Compliance costs are the costs
of compliance with Federal, state, or local regulations applicable to debit and/or prepaid cards. They do not include
compliance costs that are required of the issuer but are not specific to the provision of a debit card, such as
compliance with anti-money laundering and Bank Secrecy Act regulations.[endofnote.]

incentives were higher for signature debit (mean per transaction cost of 5 cents) than for PIN
debit (mean per transaction cost of 2 cents). Card production and delivery costs were higher for
prepaid transactions than either signature or PIN transactions, with a mean per transaction cost of
11 cents and a mean per respondent cost of 39 cents. These high costs likely reflect the
distribution channel for many prepaid cards through various merchant locations. Nonsufficient
funds handling costs were also high for prepaid transactions with a mean cost of 7 cents per
transaction.
VI. Network Fees
The payment card networks reported various network fees that they charge to all issuers
and all acquirers (including issuers and acquirers not surveyed). The survey distinguished
between fees that are charged on a per-transaction basis ("transaction fees") and those that are
not ("non-transaction fees"). Table 7 summarizes network fees and incentives or discounts paid
by networks to issuers and acquirers. Total network fees were over $4.1 billion. Networks
charged issuers over $2.3 billion in fees and charged acquirers over $1.8 billion in fees. Almost
76 percent of the total fees paid, or $3.1 billion, were charged by signature debit networks. More
than $3.4 billion, or 82 percent of total fees paid, were transaction-related fees.
Networks paid issuers almost $700 million and acquirers more than $300 million in
discounts and incentives. Of the total incentives or discounts paid by networks, 81 percent were
paid by signature networks.
Table 8 presents per transaction averages for transaction fees, non-transaction fees, total
fees, and incentives or discounts paid to issuers from networks. In general, the proportion of fees
paid by each party varied by network type.

Aggregating all network fees, the average per transaction network fee was 6 cents for
issuers and 5 cents for acquirers. The average network fee for signature debit transactions was 8
cents for issuers and 6 cents for acquirers. Thus, about 60 percent of signature debit network
fees were paid by issuers and 40 percent were paid by acquirers. The average network fee for
PIN debit transactions was 2 cents for issuers and 4 cents for acquirers. Thus, about 33 percent
of PIN debit network fees were paid by issuers and 67 percent by acquirers. For prepaid, the
average network fee was 7 cents for issuers and 5 cents for acquirers. Thus, about 58 percent of
prepaid network fees were paid by issuers and 42 percent were paid by acquirers.
Incentives and other discounts averaged 2 cents per transaction for issuers and 1 cent per
transaction for acquirers. Signature debit networks provided average incentives and discounts
of 3 cents per transaction to issuers and 1 cent per transaction to acquirers. Thus, 75 percent of
signature debit network incentives and discounts were provided to issuers and 25 percent to
acquirers. PIN debit networks provided average incentives and discounts of 1 cent per
transaction to issuers but less than one half of one cent per transaction to acquirers.
VII. Fraud Losses
The surveys requested information related to fraud losses from both issuers and payment
card networks. The Board estimates that industry-wide fraud losses to all parties of debit card
transactions were approximately $1.34 billion in 2009.

About $1.11 billion of these losses

arose from signature debit card transactions, about $181 million arose from PIN debit card
transactions and almost $18 million arose from prepaid card transactions.

[note:] 22

Industry-wide fraud losses were extrapolated from data reported in the issuer and network surveys. Of the 89
issuers that responded to the issuer survey, 52 issuers provided data on total fraud losses related to their electronic
debit card transactions in the Gross Fraud Losses (4) part of the fraud loss section of the debit card issuer survey.
These issuers reported $726 million in total fraud losses to all parties to card transactions and represented 54 percent
of the total transactions reported by networks.[endofnote.]
[note:]
23
Revisions in the data plus the inclusio
fraud loss estimates that were included in the December 2010 proposal (75 FR 81740-81741, December 28, 2010).

Table 9 presents various statistics for the total fraud losses to issuers and merchants
related to signature debit, PIN debit, prepaid, and all transactions types combined.

Fifty-two

issuers provided data on total fraud losses relating to their electronic debit and prepaid card
transactions; they reported $726 million in total debit card fraud losses to all parties. For all
transaction types, about 0.04 percent of purchase transactions were fraudulent transactions, with
0.06 percent of signature debit, 0.01 percent of PIN debit, and 0.03 percent of prepaid purchase
transactions reported as fraudulent. The average loss per purchase transaction was about 4 cents,
and represented about 9 basis points of transaction value. For signature, the average loss per
purchase transaction was 5 cents, and represented about 13 basis points of transaction value. For
PIN debit, the average loss per transaction was 1 cent, or about 3 basis points of transaction
value. Thus, on a per-dollar basis, signature debit fraud losses are approximately 4 times PIN
debit fraud losses.

For prepaid, the average loss per transaction was 1 cent, and represented

about 4 basis points of transaction value.
Table 10 has similar summary information on fraud losses that are absorbed by issuers.
For all transaction types, the average loss per transaction (and also the fraud loss incurred by the
median issuer) was 2 cents, or around 5 basis points of the value of transactions. Issuers lost an
average of 2 cents per transaction, or 6 basis points, with signature transactions; 1 cent per
transaction, or 2 basis points, with PIN transactions; and 1 cent, or almost 3 basis points, with
prepaid transactions.

The higher losses for signature debit card transactions result from both a higher rate of fraud and higher transaction
volume for signature debit card transactions. The sum of card program fraud losses will not equal the industry-wide
fraud losses due to different sample sizes and rounding.[endofnote.]
[note:] 24
According to our surveys, fraud losses to networks and acquirers are negligible. In addition, many issuers provide
cardholders with liability protection against fraudulent transactions where the cardholder liability is zero or a small
amount.[endofnote.]
[note:] 25
In the December proposal, it was reported that signature debit fraud losses were about 3.75 times PIN debit fraud
losses. The new number is a result of data revisions.[endofnote.]
[note:] 26
These data are from the Net Fraud Losses (7) part of the fraud loss section of the debit card issuer survey.[endofnote.]

The most commonly-reported and highest cost fraud types were counterfeit card fraud;
lost and stolen card fraud; and mail, telephone and Internet order fraud (i.e, card-not-present
fraud).

Table 11 breaks out some of the fraud loss data by these three most commonly-

reported fraud types.

Counterfeit card fraud had the highest basis point loss for both signature

debit and PIN debit transactions, at 4.5 and 1 basis points, respectively. Counterfeit card fraud
and lost and stolen card fraud combined was about three and a half times larger for signature
debit than it was for PIN debit transactions. Fraud related to mail, telephone, and Internet orders
was 4 basis points for signature debit transactions, but was immaterial for PIN transactions,
largely because virtually all mail, telephone, and Internet debit card transactions are routed over
signature debit networks.
Only a small number of responses provided information for fraud from card-present and
card-not-present transactions for signature and PIN.

Respondents reported that for signature

debit transactions, fraud losses for card-not-present transactions were higher than fraud losses for
card-present transactions.

On a transactions-weighted average, card-not-present fraud losses

were estimated to be 17 basis points of the value of card-not-present transactions; card-present
fraud losses represented an estimated 11 basis points of the value of card-present signature debit

[note:] 27

Some issuers reported ATM fraud which was out of the scope of debit card transaction fraud and so was excluded
from fraud totals.[endofnote.]
[note:] 28
For Table 10, fraud losses for a particular transaction type were divided by all purchase transactions for that
transaction type. For example, for signature debit, fraud loss per transaction related to lost and stolen cards is the
ratio of the total fraud loss due to lost and stolen cards divided by the total number of signature debit purchase
transactions.[endofnote.]
[note:] 29
For the purposes of this estimation, card-not-present fraud losses were limited to respondents' reporting of fraud
related to mail, telephone, and Internet orders. All other debit card fraud, including fraud reported as counterfeit
card and lost-or-stolen card, were assumed to be card-present fraud. Many respondents were not able to both break
out fraud losses this way, and identify card-present and card-not-present transactions.[endofnote.]
[note:]30There is no table in this document for the estimates that follow.[endofnote.]

transactions.

Card-present fraud losses were more than three times greater for signature

transactions than card-present fraud losses for PIN.
Table 12 presents the percentage of fraud losses borne by issuers and merchants.
Across all types of transactions, 62 percent of reported fraud losses were borne by issuers and 38
percent were borne by merchants. The distribution of fraud losses between issuers and
merchants differs based on the authorization method used in a debit card transaction. Issuers
reported that nearly all the fraud losses associated with PIN debit card transactions (96 percent)
were borne by issuers. In contrast, reported fraud losses were distributed more evenly between
issuers and merchants for signature debit and prepaid card transactions. Specifically, issuers and
merchants bore 59 percent and 41 percent of signature debit fraud losses, respectively. Further,
issuers and merchants bore 67 percent and 33 percent of prepaid fraud losses, respectively.
In general, merchants are subject to greater liability for fraud in card-not-present
transactions than in card-present transactions. According to the survey data, merchants assume
approximately 74 percent of signature debit card fraud for card-not-present transactions,
compared to 23 percent for all other types of signature debit card fraud.
VIII. Fraud Prevention Activities and Costs
The survey asked for cost data from specified categories of fraud-prevention activities,
and asked respondents to list any additional activities and associated costs related to combating
debit card fraud. Issuers identified numerous categories of activities used to detect, prevent, and
mitigate fraud and reported the costs associated with these activities as they relate to debit card

[note:] 31

These estimates were projected out to all respondents that reported fraud losses based on a smaller sample of
respondents that broke out both fraud losses and transactions into card-present and card-not-present components.[endofnote.]
[note:]
32
Card-present fraud losses were estima
[note:] 33
Most issuers reported that they offer greater liability protection to their cardholders than required by regulation,
such that the fraud loss borne by cardholders is negligible. See 15 U.S.C. § 1693g and 12 CFR § 205.6. Payment
card networks and acquirers also reported that they absorb very limited fraud losses.[endofnote.]

transactions. The categories of fraud-prevention and data security activities included the
following: transaction monitoring, merchant blocking, card activation and authentication
systems, PIN customization, system and application security measures such as firewalls and
virus protection software, and ongoing research and development aiming to make fraudprevention practices more effective. Table 13 provides summary information related to fraudprevention activities and data security.
When all fraud-prevention activities reported by issuers except data security are included,
the mean per transaction was 1.6 cents, the mean per respondent was 2.9 cents, and the median
was 1.7 cents. The most commonly reported fraud-prevention activity was transaction
monitoring. This activity generally is an input to the authorization of a particular debit card
transaction, such as the use of neural networks and fraud risk scoring systems that may lead to
the denial of a suspicious transaction. For transactions monitoring, the mean per transaction was
0.6 cents, the mean per respondent was 1.1 cents, and the median was 0.7 cents. The costs
associated with research and development, card activation systems, PIN customization, merchant
blocking, and card authentication systems were all small when measured on a per-transaction
basis, typically less than one-tenth of a cent each.
The survey asked issuers to separately report their data-security activities and costs. For
all data-security costs reported by issuers in the card issuer survey, the mean per transaction was
0.1 cents, the mean per respondent was 0.3 cents, and the median was 0.1 cents.
IX. Costs Included in Setting the Interchange Fee Standard
Table 14 provides summary statistics for the costs included in setting the interchange fee
standards.

Issuers that provided data on their total processing costs and broke out their

transactions monitoring costs for all debit card transaction types were included in the sample that
[note:] 34

See 12 C.F.R. § 235.3.[endofnote.]

was used to determine the base component of the interchange fee standard.

The summary

statistics are derived from the sum of each issuer's total processing costs and transactions
monitoring costs.

Issuers that provided data on their fraud losses net of chargebacks and

recoveries for all debit card transaction types were included in the sample that was used to
determine the ad valorem component.
The mean per transaction for the base cost component was 8 cents, the mean per
respondent was 18 cents, and the median was 11 cents. The 80th percentile of the base
component was 21 cents. The mean per transaction of the issuer fraud loss ad valorem
component was about 5 basis points. The mean per respondent was 7 basis points and the
median was 5 basis points.

[note:]

35

Issuers that did not have or did not explicitly break out their prepaid transactions data, but did have signature and
PIN data, were included. In all, 43 issuers provided sufficient data to be included in this sample.[endofnote.]
[note:]36Because of differences in sample size and rounding, the sum of the relevant components in Tables 4 and 13 will
not add up precisely to the totals in Table 14.[endofnote.]
[note:]37In all, 51 issuers provided sufficient data to be included in this sample.[endofnote.]

Table 1: Volume and Value of Purchase and Return Transactions over Payment Card Networks
Transaction
volume (billions)

Transaction value Average transaction
($, billions)
value ($)

PurchaseTransactions:Signature
22.52 (60%)
Debit
836.53 (59%)
PurchaseTransactions:PIN
13.87
Debit
(37%)
554.97 (39%)
PurchaseTransactions:Prepaid
1.20 (3%)
37.62 (3%)
PurchaseTransactions:All
37.58
Transaction Types
1,429.12

37.15
40.03
31.47
38.03

ReturnTransactions:Signature
0.27 Debit
(84%)
ReturnTransactions:PIN 0.04
Debit (13%)
ReturnTransactions:Prepaid
0.01 (3%)
ReturnTransactions:All Transaction
0.32
Types

56.94
41.72
43.08
54.58

[note:] Numbers may not total due to rounding.[endofnote.]

15.20 (88%)
1.72 (10%)
0.38 (2%)
17.30

Table 2: Percentage of Card-present and Card-not-present Transaction Volume and Value over
Payment Card Networks

Transaction Volume:
Transaction
Transaction Value:
Card-present (%) Card-not-present (%)
Card-present (%) Card-not-present (%)

Signature Debit
PIN Debit
Prepaid
All Transaction Types

85.6
98.6
83.2
90.2

[note:] Numbers may not total due to rounding.[endofnote.]

14.4
1.4
16.7
9.8

70.1
95.8
68.2
80.1

29.9
4.2
31.6
19.8

Table 3: Interchange

Signature Debit
PIN Debit
Prepaid
All Transaction Types

Fees Received by Debit Card Issuers 1
Per Transaction Interchange Fees as
Total Interchange
Interchange
Percentage of
Fees ($, billions)
Fees ($)
Transaction Value (%)
12.5
3.2
0.5
16.2

[note:] Numbers may not total due to rounding.[endofnote.]

0.56
0.23
0.40
0.44

1.53
0.58
1.28
1.15

Table 4: Processing Costs

($)

Mean per
Transaction

Mean per
Respondent

Standard
Deviation

25th
Percentile

Median

0.01

0.03

0.05

0.01

0.01

0.04

0.08

0.09

0.03

0.06

75th
Percentile

80th
Percentile

85th
Percentile

90th
Percentile

Signature
0.02

0.03

0.07

0.09

Signature
0.10

0.10

0.11Debit:

Debit:

Fixed

0.14

Variable
Network

0.03

0.06

0.05

0.02

0.05

Signature
0.08

0.10

0.10Debit:

0.13

0.08

0.18

0.14

0.10

0.13

Signature
0.19

0.21

0.26

0.44

0.01

0.03

0.04

0.00

0.01

Pin

0.02

0.03

0.05Debit:

0.08

0.03

0.06

0.06

0.02

0.05

Pin

0.09

0.09

0.10
Debit:

0.13

Variable
Network

Debit:

Total

Fixed

0.02

0.05

0.11

0.01

0.02

Pin

0.03

0.04

0.04
Debit:

0.07

0.05

0.13

0.16

0.05

0.08

Pin

0.12

0.14

0.17 Debit:

0.27

0.03

0.24

0.38

0.01

0.06

Prepaid:
0.23

0.33

0.64

1.17

0.14

0.51

0.57

0.13

0.30

Prepaid:
0.69

0.75

0.96

1.33

Variable
Network

Total

Fixed

0.06

0.14

0.27

0.03

0.07

Prepaid:
0.10

0.12

0.14

0.39

0.22

0.96

0.94

0.31

0.61

Prepaid:
1.23

1.52

2.20

2.69

0.01

0.05

0.15

0.00

0.01

All

0.03

0.04
Transaction

0.07

0.09Types:

0.04

0.12

0.28

0.02

0.06

All

0.10

Transaction
0.11

0.12

Types:
0.21

Variable

0.08

Types:
0.09

Network

0.03

0.06

0.10

0.01

0.04

All

0.07

Transaction
0.07

0.08

0.17

0.14

0.09

0.11

All

0.18

0.19
Transaction 0.32

0.41 Types:

Total

Fixed

Total

[note:]1Processing costs are those related to authorization, clearance, and settlement of a debit card transaction. It includes costs related to routine and non-routine transactions. It does
not include transaction monitoring related to fraud prevention, which is reported separately in Table 13.[endofnote.]
[note:] 2
The mean per transaction is defined as the sum of all respondents' reported costs for a particular cost category divided by the sum of the same respondents' reported purchase
transactions. This calculation corresponds to the weighted average of costs across respondents, where the weight for each respondent is its share of total volume. The mean per
respondent is the average of each respondent's ratio of reported cost for a particular category to its purchase transactions. The percentiles are based on each respondent's ratio of
reported cost for a particular category to its purchase transactions. The standard deviation is around the mean per respondent.[endofnote.]
[note:] 3
Individual cost components may not sum to the totals for a given product type and summary statistic because of differences in the set of respondents across cost components and
because certain summary statistics are not able to be summed (e.g., the percentile of a sum does not generally equal the sum of the percentiles).[endofnote.]

Table 5: In-house, Third-party, and Network Processing Costs for Responding Issuers
Mean per
Mean per
transaction respondent

($)

0.03 (37%)
0.03 (30%)
0.03 (36%)
0.08

0.05 (27%)
0.08 (45%)
0.06 (32%)
0.18

SignatureDebit:In-house
SignatureDebit:Third-Party
SignatureDebit:Network
Signature

0.02 (48%)
0.01 (24%)
0.02 (32%)
0.05

0.04 (32%)
0.06 (46%)
0.05 (37%)
0.13

PINDebit:In-house
PINDebit:Third-Party
PINDebit:Network
PIN

0.04 (18%)
0.13 (58%)
0.06 (25%)
0.22

0.24 (25%)
0.56 (59%)
0.14 (14%)
0.96

Prepaid: In-house
Prepaid: Third-Party
Prepaid: Network
Prepaid:

0.03 (39%)
0.02 (29%)
0.03 (33%)
0.08

0.05 (29%)
0.14 (78%)
0.06 (35%)
0.17

AllTransactionTypes:In-house
AllTransactionTypes:Third-Party
AllTransactionTypes:Network
All
Transaction

Debit:

Debit:

[note:]1The mean per transaction is defined as the sum of all respondents' reported costs for a particular cost category divided by the
the same respondents' reported purchase transactions. This calculation corresponds to the weighted average of costs across
respondents, where the weight for each respondent is its share of total volume. The mean per respondent is the average of each
respondent's ratio of reported cost for a particular category to its purchase transactions.[endofnote.]
[note:]
2
Dollar value and percentages may not total due to rounding and because of differences in the set of respondents across c
components.[endofnote.]

Table 6: Card Program Costs, Other than Authorization, Clearance, and Settlement Costs ($)
Mean per
Transaction

Mean per
Respondent

Standard
Deviation

25th
Percentile

0.02
0.06
0.05
0.02
0.00
0.02
0.01

0.04
0.04
0.09
0.02
0.01
0.02
0.01

Signature
0.12
0.01
0.01
Debit:
Signature
0.03
0.01
Debit:
0.03
Signature
0.23
0.01
Debit:
0.03
Signature
0.02
0.00
Debit:
0.01
Signature
0.02
0.00
Debit:
0.00
Signature
0.02
0.00
Debit: 0.01
Signature
0.03 Debit:Compliance
0.00
0.00

0.03
0.03
Card Production
0.05 and
0.07
0.05 Cardholder
0.06
0.07
0.09
0.08
Rewards
0.10 and Other 0.19
0.25
0.04
Network
0.04 non-transaction-processing
0.05
0.05
0.01
Research
0.01and
0.02
0.03
0.02
Nonsufficient0.03
Funds
0.04
0.04
0.01
0.01
0.02
0.03

0.01
0.07
0.02
0.01
0.00

0.03
0.04
0.02
0.02
0.01

PIN0.05
PIN0.05
PIN0.02
PIN0.03
PIN0.02

0.02
0.05
0.03
0.02
0.01

0.01

0.01

PIN0.02
Debit:Compliance
0.00

0.00

0.01

0.11
0.11

0.39
0.17

Prepaid:
0.63
Prepaid:
0.14

0.09
0.10

0.26
0.12

0.47
0.26

0.01
0.03
0.07
0.03

0.07
0.32
0.11
0.08

Prepaid:
0.16
0.00
Prepaid:
0.74
0.01
Prepaid:
0.22
0.00
Prepaid:
0.22 Compliance
0.00

0.02
0.03
0.02
0.01

0.05
Network
0.05 non-transaction-processing
0.07
0.10
0.21
Research
0.25and
0.50
1.25
0.03
Nonsufficient0.03
Funds
0.56
0.56
0.04
0.04
0.04
0.04

0.02
0.07
0.04
0.01
0.01
0.01
0.01

0.05
0.04
0.05
0.02
0.01
0.01
0.01

All 0.11
0.01
Transaction
All 0.04
Transaction
0.01
All 0.07
Transaction
0.01
All 0.02
Transaction
0.00
All 0.02
Transaction
0.00
All 0.01
Transaction
0.00
AllTransaction
0.03
Types:
0.00
Compliance

0.02
Types:
0.03
0.04
Card Production
0.06 and
0.10
0.03Types:
0.04 Cardholder
0.06
0.09
0.10
0.02 Types: 0.06
Rewards
0.09 and Other 0.13
0.16
0.01
Types: 0.03
Network
0.03 non-transaction-processing
0.04
0.04
0.01 Types:
0.01
Research
0.01and
0.02
0.04
0.01
Types:
0.02
Nonsufficient0.02
Funds
0.02
0.03
0.00
0.01
0.02
0.02
0.03

0.01
0.01
0.01
0.00
0.00

PIN

Median

Debit:
0.01
Debit: 0.03
Debit:0.02
Debit:
0.00
Debit: 0.00
Debit:

75th
Percentile

80th
Percentile

85th
Percentile

90th
Percentile

0.03
Card Production
0.06 and
0.06
Cardholder
0.07
0.09
0.10
Rewards
0.04 and Other 0.05
0.05
Network
0.03 non-transaction-processing
0.03
0.04
Research
0.01and
0.01
0.01

Prepaid:

Delivery
Inquiries
Incentives
fees
Development
Handling2

Nonsufficient Funds
0.02

Delivery
Inquiries
Incentives
fees
Development
Handling

0.02

0.54
Card Production
0.60 and
Cardholder
0.28
0.30

0.03

0.65
0.35

Rewards and Other

Delivery
Inquiries
Incentives3
fees
Development
Handling

Delivery
Inquiries
Incentives
fees
Development
Handling

[note:]1The mean per transaction is defined as the sum of all respondents' reported costs for a particular cost category divided by the sum of the same respondents' reported purch
transactions. This calculation corresponds to the weighted average of costs across respondents, where the weight for each respondent is its share of total volume. The mean per
respondent is the average of each respondent's ratio of reported cost for a particular category to its purchase transactions. The percentiles are based on each respondent's ratio of
reported cost for a particular category to its purchase transactions. The standard deviation is around the mean per respondent.[endofnote.]

Table 7: Network Fees and Incentives 1 ($, billions)
Non-transaction
Transaction Fees
Fees
Signature Debit

Issuers
Acquirers or Merchants
Total

Total Fees

Incentives or
Discounts Paid

1.51 (60%)
1.01 (40%)
2.52

0.38 (60%)
0.25 (40%)
0.62

1.88 (60%)
1.26 (40%)
3.14

0.57 (68%)
0.26 (32%)
0.84

0.27 (35%)
0.50 (65%)
0.77

0.07 (81%)
0.02 (19%)
0.09

0.34 (39%)
0.52 (61%)
0.86

0.09 (58%)
0.07 (42%)
0.16

0.07 (61%)
0.05 (39%)
0.12

0.02 (61%)
0.01 (39%)
0.03

0.09 (61%)
0.06 (39%)
0.14

0.03 (77%)
0.01 (23%)
0.04

1.84 (54%)
1.56 (46%)
3.41

0.46 (63%)
0.27 (37%)
0.74

2.31 (56%)
1.84 (44%)
4.14

0.70 (67%)
0.34 (33%)
1.04

PIN Debit
Issuers
Acquirers or Merchants
Total
Prepaid
Issuers
Acquirers or Merchants
Total
All Transaction Types
Issuers
Acquirers or Merchants
Total
1 Numbers

may not total due to rounding.

24

Table 8: Payment Card Network Fees and Reimbursements, Average per Purchase
Transaction ($)
Issuer

Acquirer

0.07

0.04

0.02

0.01

0.08

0.06

0.03

0.01

Signature
0.11
Signature
0.03
Signature
0.14
Signature
0.04

0.02

0.01

0.04
0.00
0.04
0.00

PIN
PIN
PIN
PIN

0.06

0.04

0.01

0.01

0.07

0.05

0.02

0.01

Prepaid:0.09
Prepaid:0.02
Prepaid:0.12
Prepaid:0.03

0.05

0.04

0.01

0.01

0.06

0.05

0.02

0.01

0.01
0.02

[note:] Numbers may not total due to rounding.[endofnote.]

Total

All
All
All
All

0.06
0.01

0.06
0.01

Debit:
Debit:

Debi

Deposit:
Deposit:
Dep
Deposit:

0.09

Transaction
0.02 Transaction
0.11
Transaction
0.03
Transaction

Typ

Table 9: Total Debit Card Fraud Losses Incurred by Both Issuers and Merchants
Mean per
Transaction

Mean per
Respondent

Standard
Deviation

25th
Percentile

0.06%
$0.05
12.71

0.09%
$0.07
15.11

0.22%
$0.06
8.87

0.02%
SignatureDebit
0.04%
($1.11billion):Incidence
0.08%
$0.03
Signature $0.05 Debit
$0.07 ($1.11
9.50Signature 12.18 Debit
19.64 ($1.11

0.09%
$0.08
21.71

0.01%
$0.01
3.19

0.01%
$0.02
5.07

0.02%
$0.04
10.05

0.00%
PINDebit($181
0.00%
million):Incidence
0.02%
$0.01
PIN
$0.01
Debit
$0.02($181
1.55PIN
2.82Debit
4.85($181

0.02%
$0.03 million):
6.23 million):

0.02%
$0.04
7.58

0.02%
Loss per
$0.04
Loss 8.68

0.03%
$0.01
4.01

0.07%
$0.02
6.26

0.12%
$0.02
8.25

0.00%
PrepaidDebit0.01%
($18million):Incidence
0.06%
$0.00
Prepaid
$0.01 Debit
$0.03 ($18
0.18Prepaid
3.32 Debit
7.00 ($18

0.07%
0.24%
$0.04 million): $0.04
11.77 million): 15.84

0.28%
Loss per
$0.05
Loss 22.45

0.04%
$0.04
9.03

0.06%
$0.05
10.09

0.13%
$0.04
5.16

0.01%
AllTransaction
0.03%
Types($1.34billion):
0.05%
Incidence
0.07%
$0.03
All
Transaction
$0.03
$0.05
Types
($1.34
$0.06
6.60All
Transaction
9.39
12.26
Types
($1.34
13.55

Median

75th
Percentile

80th
Percentile

85th
Percentile

0.11%
billion): $0.10
billion): 23.98

0.07%
billion):
$0.08
billion):
16.81

90th
Percentile

0.15%
Loss per
$0.13
Loss 26.64

0.07%
Loss per
$0.08
Loss 18.07

[note:]1The mean per transaction is defined as the sum of all respondents' reported incidence or fraud losses divided by the sum of the same respondents' reported purchase transaction
This calculation corresponds to the weighted average of incidence or fraud losses across respondents, where the weight for each respondent is its share of total volume or value.
The mean per respondent is the average of each respondent's ratio of reported incidence or fraud losses to its purchase transactions. The percentiles are based on each
respondent's reported ratio of incidence or fraud losses to its purchase transactions. The standard deviation is around the mean per respondent.[endofnote.]
[note:] 2
Incidence of loss is defined as the number of fraudulent transactions divided by the number of purchase transactions. Loss per transaction represents the dollar amount of fraud
losses divided by the number of purchase transactions. Basis point (BPS) losses are the dollar value of fraud losses divided by the dollar value of purchase transactions.[endofnote.]

Table 10: Issuer Fraud Losses
Mean per
Transaction

Mean per
Respondent

Standard
Deviation

25th
Percentile

Median

$0.02
6.41

$0.05
9.57

$0.06
7.88

$0.02
4.05

$0.03
6.68

$0.01
2.41

$0.02
4.19

$0.03
7.35

$0.00
1.11

$0.01
2.63

$0.01
4.34

$0.02
6.09

$0.02
4.85

$0.03
6.56

$0.03
4.84

75th
Percentile

80th
Percentile

85th
Percentile

$0.05
Signature
12.54
Signature

$0.06
14.28

$0.07
16.12

$0.09Debit:
16.84Debit:

$0.01
2.18

$0.02
PIN
4.03
PIN

$0.02
4.56

$0.03
6.59

$0.04
Debit:
8.00
Debit:

$0.00
0.22

$0.01
2.40

$0.02
Prepaid:
6.91
Prepaid:

$0.02
7.82

$0.02
7.87

$0.03
14.74

$0.01
3.53

$0.02
4.74

$0.03
All
7.64
All

$0.04
9.11

Transaction
$0.06
Transaction
12.70

90th
Percentile

$0.06
13.62

Types:
Types:

[note:]1The mean per transaction is defined as the sum of all respondents' fraud losses divided by the sum of the same respondents' reported purchase transactions. This calculat
corresponds to the weighted average of fraud losses across respondents, where the weight for each respondent is its share of total volume or value. The mean per respondent is
the average of each respondent's ratio of reported fraud losses to its purchase transactions. The percentiles are based on each respondent's ratio of reported fraud losses to its
purchase transactions. The standard deviation is around the mean per respondent.[endofnote.]
[note:]2Loss per transaction represents the dollar amount of fraud losses divided by the number of purchase transactions. Basis point (BPS) losses are the dollar value of fraud los
divided by the dollar value of purchase transactions.[endofnote.]

Table 11: Total Fraud Losses Incurred by Issuers and Merchants for Select Types of Debit Card Fraud
M e a n per
Transaction

M e a n per
Respondent

Standard
Deviation

25th
Percentile

0.01%
$0.06
6.34

0.00%
$0.00
1.23

0.01%
$0.01
Signature
1.74

0.01%
$0.01
2.21

0.01%
Debit: $0.01
2.71

0.02%
$0.03
4.78

0.00%
$0.01
1.50

0.01%
$0.01
Signature
3.02

0.01%
$0.03
Debit:
7.47

0.02%
Counterfeit:Los
$0.04
8.45

0.09%
$0.01
3.09

0.00%
$0.00
1.08

0.01%
$0.01
Signature
3.63

0.03%
$0.02
Debit:
6.10

0.04%
$0.03
Mail,
6.50

0.00%
$0.01
1.45

0.00%
$0.01
1.83

0.00%
$0.00
0.19

0.00%
$0.00
PIN
0.79

0.00%
$0.01 Debit:
1.61

0.01%
$0.01
2.71

0.01%
Lost $0.01
2.91

0.00%
$0.01
1.13

0.00%
$0.01
1.78

0.00%
$0.00
0.06

0.00%
$0.00
PIN
0.82

0.00%
$0.01
1.26

0.00%
$0.01
Debit:
1.49

0.00%
$0.01
2.19

0.00%
$0.00
0.20

0.00%
$0.00
0.46

0.00%
$0.00
0.00

0.00%
$0.00
PIN
0.00

0.00%
Debit:
$0.00
0.26

0.00%
Mail,
$0.00
0.32

0.00%
telephone
$0.00
0.46

0.02%
$0.01
3.53

0.07%
$0.02
8.24

0.00%
$0.00
0.00

0.00%
$0.00
Prepaid:
0.15

0.01%
$0.01
2.38

0.03%
Lost
$0.02
2.61

0.01%
$0.00
0.39

0.04%
$0.00
0.75

0.00%
$0.00
0.00

0.00%
$0.00
Prepaid:
0.00

0.00%
$0.00
0.33

0.00%
$0.00
0.50

0.01%
$0.00
1.06

0.00%
$0.00
0.00

0.00%
$0.00
Prepaid:
0.00

0.00%
$0.00 Mail,
0.41

0.01%
$0.04
4.69

0.00%
$0.00
1.09

0.01%
$0.01
All
1.37

0.01%
$0.02
3.51

0.00%
$0.00
0.91

0.00%
$0.01
All
2.52

0.06%
$0.01
1.97

0.00%
$0.00
0.04

0.00%
$0.01
All
1.86

SignatureDebit:Lost or stolen:
Incidence

0.01%
0.01%
$0.01
$0.02
SignatureDebit:Lostorstolen:Loss (BPS)
1.70
3.21
Signature Debit: Counterfeit:
0.01%
0.01%
Incidence
$0.02
$0.02
SignatureDebit:Counterfeit:Loss( B P S4.52
)
4.73
SignatureDebit:Mail, telephone or internet order:
0.02%
0.03%
Incidence
$0.02
$0.02
SignatureDebit:Mail,telephoneorinternet
4.27
order:Loss ( B P3.77
S)

75th
Percentile

Median

80th
Percentile

85th
Percentile

90th
Percentile

0.02%
Lost
$0.02
3.04

0.02%
or$0.02
3.95

0.03%
$0.04
9.28

0.03%
$0.04
9.57

0.04%
telephone
$0.03
7.08

0.04%
or$0.03
8.39

stolen:

Loss per

s per

internet

order:

Los s per

PINDebit:Lost or stolen:
Incidence
PINDebit:Lostorstolen:Loss ( B P S )
PIN Debit: Counterfeit:
Incidence

0.00%
$0.00
0.74

0.00%
$0.00
PINDebit:Counterfeit:Loss ( B P S )
0.97
PINDebit:Mail, telephone or internet order:
0.00%
Incidence
$0.00
PINDebit:Mail,telephoneorinternetorder:
0.11
Loss ( B P S )

Prepaid: Lost or stolen:
Incidence
Prepaid:Lostorstolen:Loss ( B P S )
Prepaid: Counterfeit:

0.01%
$0.01
1.74

0.01%
$0.00
Prepaid:Counterfeit:Loss ( B P S )
0.75
Prepaid: Mail, telephone or internet order:
0.00%
Incidence
$0.00
Prepaid:Mail,telephoneorinternetorder:0.20
Loss ( B P S )
Incidence

AllTransactionTypes:Lost or stolen:
0.00%
0.01%
$0.01
$0.02
AllTransactionTypes:Lostorstolen:Loss
1.45
(BPS)
2.82
All Transaction Types: Counterfeit:
0.01%
0.01%
Incidence
$0.02
$0.02
AllTransactionTypes:Counterfeit:Loss 4.29
(BPS)
3.45
AllTransacionTypes:Mail, telephone or internet order:
0.01%
0.02%
Incidence
$0.01
$0.01
AllTransacionTypes:Mail,telephoneorinternet
1.84 order:Loss 2.04
(BPS)
Incidence

0.01%
Transaction
$0.01
2.14

stolen:

or

0.00%
$0.00
0.75

0.01%
$0.00
Counterfeit:
0.94

0.02%
$0.01
2.10

0.00%
$0.00
telephone
0.69

0.00%
$0.00
0.97

0.00%
$0.01
internet
1.86

or

0.02%
Types:
$0.02
3.92

Mail,

or

Los s per

0.00%
$0.00 internet
0.66

0.06%
$0.05
25.77

0.02%
Types: $0.02
Lost
3.44

Los s per

0.00%
Counterfeit:
$0.01
2.84

0.03%
$0.03 or
3.69

0.02%
0.02%
$0.02 Transaction
$0.02
5.50
5.68
0.02%
Transacion
$0.02
2.83

0.01%
or $0.01
3.44

0.02%
$0.02
stolen:Los
3.61

0.02%
$0.03
8.21

0.02%
$0.03
Types:
6.25

0.04%
$0.04
7.45

0.03%
$0.02
telephone
4.32

0.03%
$0.02
or
4.75

order:

stolen:

Los s per

Los s per

Los s per

order:

Los s per

s per

Counterfeit:

internet

Los s per

order:

Los s per

[note:]1The mean per transaction is defined as the sum of all respondents' reported incidence or fraud losses divided by the sum of the same respondents' reported purchase transaction
This calculation corresponds to the weighted average of incidence or fraud losses across respondents, where the weight for each respondent is its share of total volume or value.
The mean per respondent is the average of each respondent's ratio of reported incidence or fraud losses to its purchase transactions. The percentiles are based on each
respondent's reported ratio of incidence or fraud losses to its purchase transactions. The standard deviation is around the mean per respondent.[endofnote.]
[note: ] 2
Incidence of loss is defined as the number of fraudulent transactions divided by the number of purchase transactions. Loss per transaction represents the dollar amount of fraud
losses divided by the number of purchase transactions. Basis point (BPS) losses are the dollar value of fraud losses divided by the dollar value of purchase transactions.[endofnote.]

Table 12: Issuer and Merchant Shares of Fraud Loss
Merchant Loss:
Issuer Loss:
Mean per Fraud Mean per Fraud
Loss(%)
Loss (%)

SignatureDebit:Total
Mail, Telephone or Internet Order

PINDebit:Total
Mail, Telephone or Internet Order

Prepaid: Total
Mail, Telephone or Internet Order

AllTransactionTypes:Total
Mail, Telephone or Internet Order

Merchant Loss:
Issuer Loss:
Merchant Loss:
Mean per
Mean per
Median (%)
Respondent (%) Respondent (%)

41

59

33

74
23
26
18

26
77
74
82

54
21
25
14

4

96

12

56
2
5
2

44
98
95
98

48
10
13
7

33

67

31

23
35
18
21

77
65
82
79

35
29
26
29

38

62

31

64
19
21
15

36
81
79
85

54
16
20
11

67
Signature
46
79
Signature
75
86

Issuer Loss:
Median (%)

39

61

61
15
18
9

39
85
82
91

0

100

44
0
0
0

56
100
100
100

69
Prepaid:
65
71
Prepaid:
74
71

35

65

35
33
20
20

65
67
80
80

69
All
46
84
All
80
89

34

66
Transaction
51
Transaction
87
83
93

88
PIN
52
90
PIN
87
93

Debit:

Ca

Debit:

Ca
Si
Si

Debit:

Ca

Debit:

Ca
PI
PI

Ca

49
13
17
7

Ca
Pr
Pr

Types:

Ca

Types:

Ca
Al
Al

[note:]1Merchant Loss: Mean per Fraud Loss is the sum of all respondents' reported fraud-related chargebacks to merchants divided by the sum of the same respondents' reported
combined fraud losses for merchants and issuers. Mean per Respondent is the average of each respondent's ratio of reported fraud-related chargebacks to merchants over its
reported combined fraud losses for merchants and issuers. Issuer Loss: Mean per Fraud Loss and Mean per Respondent are defined similarly using issuers' net fraud losses
instead of fraud related chargebacks to merchants.[endofnote.]

Table 13: Issuer Fraud Prevention Costs ($
Mean per

Mean per

Standard

25th

Transaction

Respondent

Deviation

Percentile

0.016

0.029

0.061

0.011
All

0.017
Transaction 0.026

Types:
0.031

0.038 Fraud

0.006

0.011

0.016

0.003

0.007

0.012

0.014

0.001

0.003

0.008

0.000
All

0.001Transaction 0.002

0.004
Types:

0.005

Median

75th

80th

85th

90th

Percentile

Percentile

Percentile

Percentile

0.010

All
Data

0.045
0.028

Tr

0.005

[note:]1The mean per transaction is defined as the sum of all respondents' reported costs for a particular cost category divided by the sum of the same respondents' reported purch
transactions. This calculation corresponds to the weighted average of costs across respondents, where the weight for each respondent is its share of total volume. The mean per
respondent is the average of each respondent's ratio of reported cost for a particular category to its purchase transactions. The percentiles are based on each respondent's ratio of
reported cost for a particular category to its purchase transactions. The standard deviation is around the mean per respondent.[endofnote.]
2
[note:]
Transaction monitoring is a subset of fraud prevention.[endofnote.]

Table 14: Costs Included in Setting the Interchange Fee Standard
Mean per
Transaction

0.08
4.85

Mean per
Respondent

0.18
6.56

Standard
Deviation

0.15
4.84

25th Percentile

All
All

0.09
3.53

Median

Transaction
0.11
Transaction
4.74

Number of
75th Percentile 80th Percentile 85th Percentile 90th Percentile Respondents in
Sample
0.18 Types:
0.21
7.64
Types: 9.11

Base0.41
component
0.43
12.70
Ad valorem component
13.62

[note:] 1 Base component includes total authorization, clearing, and settlement costs, and transaction monitoring costs related toauthorization.[endofnote.]
2
[note:]
Ad valorem component is the issuer's fraud losses in basis points (BPS).[endofnote.]

43
51