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Debit card usage is booming in USA with interchange at 24-40¢/transaction

USAThe 2015 Debit Issuer Study, commissioned by PULSE, one of the nation’s leading debit/ATM networks, highlights the underlying trends that have contributed to the rise of debit during the 10 years since the study was introduced. 

USA debit card usage 2005-2014

Source & Copyright©2015 - Pulse

Debit is Americans’ preferred payment method.

Regulation II changed debit card economics

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/transaction, according to the study.

In addition to tracking debit interchange rates, the study also reported 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.

(Debit card popularity is a global phenomenon: Capgemini’s World Payment Report 2014 estimated that debit card transactions totaled 140.7 billion and credit cards 62.7 billion. )

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