- Effective October 21, 2011, network payment processors cannot charge more than 21 cents per debit card swipe, plus one penny for fraud prevent and 0.05 percent of the value of the transaction for dealing with fraud, according to the Federal Reserve Board. The total interchange fee for a debit card transaction cannot exceed 24 cents -- including the costs for fraud.
- Credit card issuers with less than $10 billion in assets are exempt from this regulation. Government benefits cards, such as those for food assistance or food stamps, and prepaid debit cards are also exempt from the provisions of the Dodd-Frank Wall Street Act. Although the cap on debit card interchange fees may seem low, the Federal Reserve Board originally wanted to cap fees at 12 cents.
- The restriction on debit card interchange fees probably won't affect prices much nor will they end debit card programs. Instead, banks are likely to eliminate debit card reward programs and banks might institute new fees for debit card accounts, especially for unprofitable customers. A last-minute amendment to the Dodd-Frank Act allows merchants to impose a $10 minimum purchase requirement on credit cards but not debit cards, according to Detweiler.
- Watch for new fees imposed by your bank. Banks started charging some customers $4 to $10 a month for a checking account as soon as the the Federal Reserve Bank issued its final regulations. Banks will probably push prepaid cards as an alternative to debit cards to circumvent interchange fee rules. Retailers might offer more rewards and discounts for using a debit over payment methods with a higher cost, such as credit cards.
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