Debit card-related fraud losses to merchants, cardholders and issuers rose from 2013 by 44 percent, reaching $2.41 billion in 2015, according to the Federal Reserve’s biennial survey of debit card issuers’ costs released today. The average loss as a share of transaction value rose 2.3 basis points to 10.3 points, with the median issuer covered by the interchange fee cap carrying 64 percent of the loss.
When this survey was last issued in 2014, the Fed said then it would not change its interchange fee cap and fraud-prevention adjustment. However, today’s release included no statement of the Fed’s plans. The survey noted that the study was conducted in part before the EMV liability shift that saw more secure chip cards entering the market.
Excluding fraud losses, the survey showed that the median issuer’s cost of authorizing, clearing and settling debit card transactions was 12.3 cents, a dip from 2013. Issuers at the 75th percentile had costs of 30.5 cents per transaction. Two-thirds of issuers had average costs — including fraud losses — below the base interchange fee cap.
The survey also showed that 60.6 billion debit and prepaid card transactions amounting to $2.31 trillion were processed in the U.S. in 2015. Transactions grew 6.4 percent from 2014 to 2015 at banks not subject to the rule, compared to 7.1 percent for covered issuers — the first time since the Durbin Amendment was implemented that covered issuers saw faster growth.