Credit and Debit Card Interchange Fees Assessed …/media/files/publicat/psr/...Credit and Debit...

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Credit and Debit Card Interchange Fees Assessed to Merchants in the United States August 2018 Update Payments System Research § Federal Reserve Bank of Kansas City This update includes regular and “premium issuer” interchange fees for different merchant categories and sizes. In 2010 or after, several PIN-debit networks introduced the “premium issuer” fees, which are assessed on transactions where the cards belong to qualifying issuers that typically commit to a specific level of transaction volume on a given network. Fees shown in this document as assessed to merchants are from individual networks’ fee schedules and may not necessarily represent interchange fee revenue issuers actually earn. Some networks also offer lower interchange fees than represented in the fee schedule to some (large) merchants. § Fumiko Hayashi, Payments Policy Advisor and Economist, and Sabrina Minhas, Research Associate, compiled this update. Data sources are: American Banker (various issues); ATM & Debit News (various issues); Credit Card Management (April 1999); Debit Card Directory (various years); EFT Data Book (various years); Pacificisland.publishpath.com; Vantagecard.com; Monerisusa.com; Wells Fargo; MasterCard Worldwide; and Visa Inc. The original charts appeared in Fumiko Hayashi, Richard J. Sullivan, and Stuart E. Weiner. 2003. A Guide to the ATM and Debit Card Industry, Federal Reserve Bank of Kansas City; Fumiko Hayashi, 2006. “A Puzzle of Card Payment Pricing: Why Are Merchants Still Accepting Card Payments?” Review of Network Economic, 5(1): 144- 174; Fumiko Hayashi, Richard J. Sullivan, and Stuart E. Weiner, 2006. A Guide to the ATM and Debit Card Industry: 2006 Update, Federal Reserve Bank of Kansas City; and Fumiko Hayashi, 2009. “Do U.S. Consumers Really Benefit from Payment Card Rewards?” Federal Reserve Bank of Kansas City Economic Review, First Quarter: 37-63.

Transcript of Credit and Debit Card Interchange Fees Assessed …/media/files/publicat/psr/...Credit and Debit...

Page 1: Credit and Debit Card Interchange Fees Assessed …/media/files/publicat/psr/...Credit and Debit Card Interchange Fees Assessed to Merchants in the United States August 2018 Update

Credit and Debit Card Interchange Fees

Assessed to Merchants in the United States

August 2018 Update‡

Payments System Research§

Federal Reserve Bank of Kansas City

‡ This update includes regular and “premium issuer” interchange fees for different merchant categories and sizes. In 2010 or after, several PIN-debit networks introduced the “premium issuer” fees, which are assessed on transactions where the cards belong to qualifying issuers that typically commit to a specific level of transaction volume on a given network. Fees shown in this document as assessed to merchants are from individual networks’ fee schedules and may not necessarily represent interchange fee revenue issuers actually earn. Some networks also offer lower interchange fees than represented in the fee schedule to some (large) merchants. § Fumiko Hayashi, Payments Policy Advisor and Economist, and Sabrina Minhas, Research Associate, compiled this update. Data sources are: American Banker (various issues); ATM & Debit News (various issues); Credit Card Management (April 1999); Debit Card Directory (various years); EFT Data Book (various years); Pacificisland.publishpath.com; Vantagecard.com; Monerisusa.com; Wells Fargo; MasterCard Worldwide; and Visa Inc. The original charts appeared in Fumiko Hayashi, Richard J. Sullivan, and Stuart E. Weiner. 2003. A Guide to the ATM and Debit Card Industry, Federal Reserve Bank of Kansas City; Fumiko Hayashi, 2006. “A Puzzle of Card Payment Pricing: Why Are Merchants Still Accepting Card Payments?” Review of Network Economic, 5(1): 144-174; Fumiko Hayashi, Richard J. Sullivan, and Stuart E. Weiner, 2006. A Guide to the ATM and Debit Card Industry: 2006 Update, Federal Reserve Bank of Kansas City; and Fumiko Hayashi, 2009. “Do U.S. Consumers Really Benefit from Payment Card Rewards?” Federal Reserve Bank of Kansas City Economic Review, First Quarter: 37-63.

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I-1

I. Consumer credit card interchange fees

0

20

40

60

80

100

120

Cen

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$40 transaction at small supermarkets

Visa Credit Visa Traditional Visa Signature Preferred MC Credit

MC Core MC World Elite Discover Core Discover Premium Plus

0

20

40

60

80

100

120

Cen

ts

$40 transaction at largest supermarkets

Visa Credit Visa Traditional Visa Signature Preferred MC Credit

MC Core MC World Elite Discover Core Discover Premium Plus

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I-2

0

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40

60

80

100

120

Cen

ts$40 transaction at small retailers

Visa Credit Visa Traditional Visa Signature Preferred MC Credit

MC Core MC World Elite Discover Core Discover Premium Plus

0

20

40

60

80

100

120

Cen

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$40 transaction at largest retailers

Visa Credit Visa Traditional Visa Signature Preferred MC Credit

MC Core MC World Elite Discover Core Discover Premium Plus

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I-3

Notes: * indicates products with volume tiered rates. The base rates are shown.

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120

Cen

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$40 transaction at gas stations

Visa Credit Visa Traditional Visa Signature Preferred MC Credit

MC Core MC World Elite Discover Core Discover Premium Plus

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5

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15

20

25

30

35

Cen

ts

$10 transaction at quick-service restaurants

Visa Credit Visa Traditional Visa Signature Preferred MC Credit

MC Core* MC World Elite* Discover Core Discover Premium Plus

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II-1

II. Consumer signature debit card interchange fees

Note: Exempt interchange fees are shown from October 2011 to 2018.

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Cen

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$40 transaction at small supermarkets

Visa Visa Prepaid MasterCard Discover Regulated IF

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15

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25

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45

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Cen

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$40 transaction at largest supermarkets

Visa Visa Prepaid MasterCard Discover Regulated IF

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II-2

Note: Exempt interchange fees are shown from October 2011 to 2018.

0

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60

70

Cen

ts$40 transaction at small retailers

Visa Visa Prepaid MasterCard Discover Regulated IF

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10

20

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40

50

60

70

Cen

ts

$40 transaction at largest retailers

Visa Visa Prepaid MasterCard Discover Regulated IF

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II-3

Notes: Exempt interchange fees are shown from October 2011 to 2018.

* indicates networks with volume tiered rates. The base rates are shown.

0

10

20

30

40

50

60

70

Cen

ts

$40 transaction at gas stations

Visa Visa Prepaid MasterCard* Discover Regulated IF

0

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15

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30

35

40

Cen

ts

$10 transaction at quick-service restaurants

Visa Visa Prepaid MasterCard* Discover Regulated IF

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III-1

III. Consumer PIN debit card interchange fees

Note: Exempt interchange fees are shown from October 2011 to 2018.

-10

0

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30

40

50

Cen

ts

$40 transaction at small supermarkets

Star Interlink Interlink Prepaid NYCE PulseAccel/Exchange Shazam Jeanie Networks AFFNMaestro Alaska option CU24 Regulated IF

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0

10

20

30

40

50

60

70

Cen

ts

$40 transaction at small retailers

Star Interlink Interlink Prepaid NYCE PulseAccel/Exchange Shazam Jeanie Networks AFFNMaestro Alaska option CU24 Regulated IF

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III-2

Notes: Exempt interchange fees are shown from October 2011 to 2018.

* indicates networks with volume tiered rates. The base rates are shown

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10

20

30

40

50

60

70C

ents

$40 transaction at gas stations

Star* Interlink Interlink Prepaid NYCE* Pulse*Accel/Exchange* Shazam* Jeanie Networks AFFNMaestro* Alaska option CU24* Regulated IF

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5

10

15

20

25

30

35

40

Cen

ts

$10 transaction at quick-service restaurants

Star Interlink Interlink Prepaid NYCE PulseAccel/Exchange Shazam* Jeanie Networks AFFNMaestro* Alaska option CU24 Regulated IF

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III-3

Notes: Exempt interchange fees are shown from October 2011 to 2018.

†See footnote ‡ in the title page for the definition of premium issuer rate. + indicates networks with premium issuer rates, which are shown. For other networks, regular rates are shown. * indicates networks with volume tiered rates. The base rates are shown.

-10

0

10

20

30

40

50

Cen

ts$40 transaction at small supermarkets (premium rate)†

Star+ Interlink Interlink Prepaid NYCE+ Pulse+Accel/Exchange+ Shazam Jeanie+ Networks AFFNMaestro Alaska option CU24+ Regulated IF

-10

0

10

20

30

40

50

60

70

Cen

ts

$40 transaction at small retailers (premium rate)†

Star+ Interlink Interlink Prepaid NYCE+ Pulse+Accel/Exchange+ Shazam Jeanie+ Networks AFFNMaestro Alaska option CU24 Regulated IF

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III-4

Notes: Exempt interchange fees are shown from October 2011 to 2018.

†See footnote ‡ in the title page for the definition of premium issuer rate. + indicates networks with premium issuer rates, which are shown. For other networks, regular rates are shown. * indicates networks with volume tiered rates. The base rates are shown.

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10

20

30

40

50

60

70C

ents

$40 transaction at gas stations (premium rate)†

Star*,+ Interlink Interlink Prepaid NYCE*,+Pulse*,+ Accel/Exchange*,+ Shazam* Jeanie+Networks AFFN Maestro* Alaska optionCU24*,+ Regulated IF

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5

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Cen

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Star+ Interlink Interlink Prepaid NYCE+ Pulse+Accel/Exchange+ Shazam* Jeanie+ Networks AFFNMaestro* Alaska option CU24+ Regulated IF

$10 transaction at quick-service restaurants (premium rate)†

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IV-1

IV. Consumer signature versus PIN debit interchange fees

Note: Exempt interchange fees are shown from October 2011 to 2018.

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Cen

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$40 transaction at small supermarkets

Visa Signature Debit MC Signature Debit Star InterlinkNYCE Pulse Maestro Regulated IF

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50

60

70

Cen

ts

$40 transaction at small retailers

Visa Signature Debit MC Signature Debit Star InterlinkNYCE Pulse Maestro Regulated IF

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IV-2

Notes: Exempt interchange fees are shown from October 2011 to 2018.

* indicates networks with volume tiered rates. The base rates are shown.

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10

20

30

40

50

60

70

Cen

ts$40 transaction at gas stations

Visa Signature Debit MC Signature Debit* Star* Interlink

NYCE* Pulse* Maestro* Regulated IF

0

5

10

15

20

25

30

35

40

Cen

ts

$10 transaction at quick-service restaurants

Visa Signature Debit MC Signature Debit Star InterlinkNYCE Pulse Maestro* Regulated IF

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IV-3

Notes: Exempt interchange fees are shown from October 2011 to 2018.

†See footnote ‡ in the title page for the definition of premium issuer rate. + indicates networks with premium issuer rates, which are shown. For other networks, regular rates are shown.

0

5

10

15

20

25

30

35

40

45

50C

ents

$40 transaction at small supermarkets (premium rate)†

Visa Signature Debit MC Signature Debit Star+ Interlink

NYCE+ Pulse+ Maestro Regulated IF

0

10

20

30

40

50

60

70

Cen

ts

$40 transaction at small retailers (premium rate)†

Visa Signature Debit MC Signature Debit Star+ Interlink

NYCE+ Pulse+ Maestro Regulated IF

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IV-4

Notes: Exempt interchange fees are shown from October 2011 to 2018.

†See footnote ‡ in the title page for the definition of premium issuer rate. + indicates networks with premium issuer rates, which are shown. For other networks, regular rates are shown. * indicates networks with volume tiered rates. The base rates are shown

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10

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30

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50

60

70C

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$40 transaction at gas stations (premium rate)†

Visa Signature Debit MC Signature Debit* Star*,+ Interlink

NYCE*,+ Pulse*,+ Maestro* Regulated IF

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5

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15

20

25

30

35

40

Cen

ts

Visa Signature Debit MC Signature Debit* Star+ Interlink

NYCE+ Pulse+ Maestro* Regulated IF

$10 transaction at quick-service restaurant (premium rate)†

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V-1

V. Visa, MasterCard, and Discover consumer card interchange fees

Note: (c) indicates credit card.

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$40 Visa transaction at small retailers

Visa Credit Visa Traditional Visa Traditional RewardVisa Signature (c) Visa Signature Preferred (c) Visa Signature DebitInterlink Visa Prepaid

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20

40

60

80

100

120

Cen

ts

$40 Visa transaction at largest retailers

Visa Credit Visa Traditional Visa Traditional RewardVisa Signature (c) Visa Signature Preferred (c) Visa Signature DebitInterlink Visa Prepaid

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V-2

0

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100

120

Cen

ts$40 MasterCard transaction at small retailers

MC Credit MC Core MC EnhancedMC World MC World High Value MC World EliteMasterCard Signature Debit Maestro

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20

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60

80

100

120

Cen

ts

$40 MasterCard transaction at largest retailers

MC Credit MC Core MC EnhancedMC World MC World High Value MC World EliteMasterCard Signature Debit Maestro

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V-3

0

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100

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Cen

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Discover Core Discover Rewards Discover Premium

Discover Premium Plus Discover Signature Debit Pulse

$40 Discover transaction at small and largest retailers

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VI-1

VI. Commercial credit card interchange fees

0

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3

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dol

lars

$200 transaction at retailers

Visa Purchasing Visa Business Tier I Visa Business Tier IV MC Purchasing

MC Business MC Business World Elite Discover

10

12

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18

20

22

24

26

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dol

lars

$1,000 B2B Level II transaction

Visa Purchasing Visa Business Tier I Visa Business Tier IV MC Purchasing

MC Business MC Business World Elite Discover

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VI-2

80

90

100

110

120

130

140

150

160

170

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dol

lars

$7,500 B2B transaction

Visa Purchasing Visa Business Tier I Visa Business Tier IV MC Purchasing

MC Business MC Business World Elite Discover

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VII-1

VII. Consumer versus commercial credit card interchange fees

Note: (c) indicates consumer card.

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250

300

Cen

ts

$100 Visa transaction at small retailers

Visa Credit (c) Visa Traditional (c) Visa Signature Preferred (c)

Visa Purchasing Visa Business Tier I Visa Business Tier IV

0

50

100

150

200

250

300

Cen

ts

$100 Visa transaction at largest retailers

Visa Credit (c) Visa Traditional (c) Visa Signature Preferred (c)

Visa Purchasing Visa Business Tier I Visa Business Tier IV

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VII-2

Note: (c) indicates credit card.

0

50

100

150

200

250

300C

ents

$100 MasterCard transaction at small retailers

MC Credit (c) MC Core (c) MC World Elite (c)

MC Purchasing MC Business MC Business World Elite

0

50

100

150

200

250

300

Cen

ts

$100 MasterCard transaction at largest retailers

MC Credit (c) MC Core (c) MC World Elite (c)

MC Purchasing MC Business MC Business World Elite

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VII-3

Note: (c) indicates consumer card.

0

50

100

150

200

250

300

Cen

ts$100 Discover transaction at small and largest retailers

Discover Core (c) Discover Premium (c) Discover Premium Plus (c) Discover Business