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Debit card interchange fee regulation: some assessments and considerations

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  • Zhu Wang

Abstract

The debit card interchange fee regulation introduced by the Durbin Amendment to the Dodd-Frank Act went into effect in October 2011. The regulation limits the maximum permissible interchange fee that a covered issuer can collect from merchants for a debit card transaction. In this article, we review the regulation's first-year impact on different players in the debit card market. We also discuss how the regulation may affect payments efficiency.

Suggested Citation

  • Zhu Wang, 2012. "Debit card interchange fee regulation: some assessments and considerations," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 98(3Q), pages 159-182.
    • Handle: RePEc:fip:fedreq:y:2012:i:3q:p:159-182:n:v.98no.3
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    References listed on IDEAS

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    3. James J. McAndrews & Zhu Wang, 2008. "The economics of two-sided payment card markets: pricing, adoption and usage," Research Working Paper RWP 08-12, Federal Reserve Bank of Kansas City.
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    12. Terri Bradford, 2008. "Developments in interchange fees in the United States and abroad," Payments System Research Briefing, Federal Reserve Bank of Kansas City, issue Apr.
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    Cited by:

    1. László Kajdi & Milán Kiss, 2022. "The impact of policy effects on the Hungarian payments card market," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(2), pages 107-119, June.
    2. Wang, Zhu, 2016. "Price cap regulation in a two-sided market: Intended and unintended consequences," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 28-37.
    3. Paul Heidhues & Botond Kőszegi, 2015. "On the Welfare Costs of Naiveté in the US Credit-Card Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 341-354, November.
    4. Richard J. Sullivan, 2013. "The impact of debit card regulation on checking account fees," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 59-93.
    5. Zhu Wang, 2013. "Demand externalitites and price cap regulation: Learning from a two-sided market," Working Paper 13-06, Federal Reserve Bank of Richmond.
    6. Alen Veljan, 2020. "The influence of intra- and inter-system concentration on the pre-regulated setting of interchange fees within cooperative card payment networks," Journal of Banking Regulation, Palgrave Macmillan, vol. 21(2), pages 139-151, June.
    7. Korsgaard, Søren, 2014. "Paying for payments: free payments and optimal interchange fees," Working Paper Series 1682, European Central Bank.
    8. Jonathan Chiu & Tsz-Nga Wong, 2015. "On the Essentiality of E-Money," Staff Working Papers 15-43, Bank of Canada.
    9. Neil Mitchell & Scarlett Schwartz & Zhu Wang, 2014. "The Impact of the Durbin Amendment on Merchants: A Survey Study," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 183-208.
    10. Bita Shabgard & Javier Asensio, 2023. "The price effects of reducing payment card interchange fees," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 14(2), pages 189-221, June.
    11. Jonathan Chiu & Tsz-Nga Wong, 2015. "On the Essentiality of E-Money," Staff Working Papers 15-43, Bank of Canada.

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