- The US Federal Reserve proposes a new cap on debit card interchange fees for transactions.
- The proposal aims to assess whether interchange fees are reasonable and proportional to issuer costs.
- The proposed cap would reduce interchange fees, e.g., from 0.49% to 0.35% on a $50 purchase.
- This update represents the most significant change to the cap since its initial implementation in 2011.
- The proposal allows the Reserve to make periodic updates to the cap in the future.
- While expected to benefit merchants and consumers with lower costs, there are concerns about potential consequences.
- Reserve board member Michelle Bowman questions whether the benefits will materialize and warns of increased banking product and service costs.
- She criticizes the use of a single cap and aggregated data, which may disadvantage smaller issuers.
