Interchange, Fraud Fall But Debit Transactions on the Rise

Interchange and fraud are way down, but transactions are slightly up, as the debit industry resets in the wake of the latest regulatory and market dynamics.

Average interchange rates at regulated issuers on signature debit declined by 59 percent last year, from $.52 to $.23, according to The 2013 Debit Issuer Study, commissioned by PULSE and conducted by Oliver Wyman. For PIN debit transactions, regulated issuers saw average interchange fall from $.32 to $.23 per transaction. Non-regulated issuers (those with less than $10 billion assets) saw their average PIN and signature rates decline by just $.02 per transaction.

Sixty four financial institutions — including large banks, credit unions and community banks — participated in the study. Judith McGuire, EVP, PULSE and Inderpreet Batra, a partner,at OLIVER WYMAN, will present the full results of the 2013 debit issuer study — which also delves into topics like prepaid cards, EMV readiness and mobile payments — at the ATM, Debit & Prepaid Forum in October. More information on the session.

Other Study Highlights:

  • The average active cardholder performed 19.4 debit transactions per month in 2012, up from 18.3 in 2011.
  • Total annual spend per active consumer debit card reached $8,753 in 2012 vs. $8,326 in 2011.
  • Net fraud losses declined by about 30 percent for both signature and PIN debit.
  • Signature fraud losses fell from an average of $0.031 per transaction in 2011 to $0.020 per transaction in 2012.
  • PIN debit remains eight times more secure than signature debit, with fraud loss rates dropping from $0.004 per transaction to $0.003 per transaction.