Monday's Eighth Circuit ruling on the debit cap very well may have large impacts on debit revenue for issuers over $10B. Optimizing what issuers pay the networks takes on increased importance. The Fed's own data puts network fees at roughly 10 to 22 bps for most issuers.
In the Fed's 2023 debit report, mid-size issuers (over $10B with 1 to 100 million debit transactions a year) paid about 5.3 cents per transaction in network fees, roughly 10 bps. Exempt issuers under $10B paid 9.6 cents, or 22 bps.
Those numbers use the Fed's narrow definition that excludes optional services and membership/license fees, and only covers domestic purchases, so cross-border, ATM and credit-push aren't in there either. Actual invoices can run much higher.
For a mid-size covered issuer, 5.3 cents is already about 22% of the maximum interchange allowed on an average ticket. Any cut to the cap pushes that share up.
Acquirers have the same problem on their side. They paid 64.9% of debit network fees in 2023, up from 44.3% in 2009.
Practically speaking, most programs we look at are paying network fees they don't need to, whether that's opt-out services they aren't using, best practices they haven't put in place, or billing errors. In the reviews we've run, potential savings typically land between 7% and 15% of network fees, depending on factors such as program size, complexity and cross-border mix. Unlike the cap, that's something issuers can act on now.