Posted: Jan 10, 2019
Categories: Debit Cards, EMV, Consulting
Comments: 0
Author: Lou Grilli

The Fed released its latest update on debit card interchange, and it showed very subtle but very telling trends for financial institutions with less than $10 billion in assets – a category called “exempt”, which includes all the credit unions in the U.S. except the top 7. While the lines of the graph (found here) look relatively horizontal, two takeaways are worth noting.

On one side of the coin, the average interchange for debit signature transactions (referred to by the Fed as a dual message) is increasing, from 50 cents in 2015 to 52 cents in 2018. While this sounds insignificant, a credit union that sees 100,000 signature transactions a month, is getting close to $24,000 more annually in interchange revenue for these transactions.

On the other side of the coin is debit PIN transactions (referred to by the Fed as a single message). The average interchange for these transactions is declining, from 30 cents in 2013 down to 25 cents in 2018, a full nickel. One of the drivers of this trend is the increasing sophistication of merchant processors to steer PIN transactions to the network that costs them the least.

What can credit unions do? It would be great if more transactions could be authorized as signature transactions instead of PIN, and many loyalty programs even encourage members to choose signature at the POS. Unfortunately, this is easier said than done. Terminals at several “big-box” stores are being programmed not to offer a choice.

The longer-term solution for declining average debit interchange, and a key action for credit unions to take, is to reassess the PIN networks supported by their debit portfolio. Average interchange for PIN transactions range from 35 cents per transaction down to 19 cents, varying by network. If your credit union supports both the highest and lowest charging network, the merchant will always choose the lowest. Credit unions need to evaluate their debit network contracts and optimize to just one unaffiliated network. Luckily, the Fed made the evaluation a little easier by providing a comprehensive comparison in the same updated report.

To optimize your card portfolio, ask about our Card Portfolio Growth Solutions at

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Lou Grilli

Lou GrilliLou Grilli

Lou is the AVP of Product Development & Thought Leadership at Trellance. In this role, he is responsible for managing the organization’s product portfolio, as well as providing leadership on industry trends related to data analytics and payments.

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