During this decade, the average debit cardholder increased usage of debit at the POS by 32%. In the same timeframe, card use for ATM withdrawals declined by 41%.
Ten years ago, financial institutions reported receiving a weighted average interchange of $0.41 for each consumer debit transaction. The introduction of Regulation II, which went into effect in the fourth quarter of 2011, fundamentally changed debit economics.
The interchange rate cap in Regulation II limits per-transaction interchange to large issuers (≥$10 billion in assets), while issuers with less than $10 billion in assets are exempt from this requirement. In 2014, regulated financial institutions earned a weighted average of $0.24 per debit transaction, and exempt financial institutions earned $0.40, according to the study.
In addition to tracking debit interchange rates, the study also reports on debit revenue, beginning in 2008. In that year, debit issuers earned an average of $81 in annual interchange income per active consumer debit card.
According to this year’s study data, exempt issuers generated average annual debit interchange revenue of $112 per card. Regulated issuers received average interchange income of $59 per card, with transaction growth helping to offset a portion of the impact of lower per-transaction rates.
PULSE, a Discover Financial Services company, is one of the nation’s leading debit/ATM networks.
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