WASHINGTON — The Federal Reserve Board said Tuesday it would not adjust its cap on interchange fees, leaving it at 21-cents per transaction.
The decision came attached to a biannual survey that found that 33% of debit card issuers averaged transaction fees above the cap. Surprisingly, that figure was even higher than the 20% of issuers that averaged fees higher than 21 cents before the Fed's cap was in place.
The Fed's rule, which took effect in 2011, does not apply to banks with less than $10 billion of assets and also allows bigger institutions to charge an additional 1-cent per transaction to account for certain fraud prevention activities. The Fed said the higher percentage of transactions above the cap was also due to more respondents to its survey, including foreign banks or smaller issuers that had higher costs.
The average actual fees collected by issuers were 24 cents per transaction, the Fed said. Still, covered issuers that had costs below the 21-cent cap accounted for "well over 99% of all reported covered transactions."
Retailers who had pushed for a lower cap immediately seized on the news, saying it proves the rule is "deeply flawed."
"The Federal Reserve's unwillingness to revisit their flawed rules despite this compelling data is astounding and retailers will continue to use all means necessary to ensure the reforms are implemented as the law intended," said Bill Hughes, senior vice president of government affairs at the Retail Industry Leaders Association, in a press release.
The Fed said it "does not plan to propose revisions" to the interchange standard or change the fraud-prevention adjustment based on its survey results.
Those issuers with the most debit card transaction volumes typically had the lowest costs — averaging 5 cents per transaction, the survey found.