Card brands raise interchange rates on prepaid cards

Beginning Oct. 1, 2011, Visa's regulated debit card interchange rates will be set at the maximum allowable rate for categories that include consumer and commercial prepaid cards. The rates for other prepaid card categories may be raised or lowered, Visa said.

Oct. 1 is the day on which the debit card interchange cap goes into effect. Debit interchange is capped at 21 cents per transaction, plus additional stipulations. The caps were agreed upon by the Federal Reserve Board based on regulatory guidance provided by the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Card issuers with assets under $10 billion are exempt from the cap.

In the announcement, Visa said all debit and prepaid card issuers are expected to register their exempt and non-exempt card portfolios by Oct. 1 to comply with the Durbin rules.

The announcement also stipulated changes made by MasterCard Worldwide and Discover Financial Services. The two card brands created two new interchange rate categories apiece for Durbin-regulated issuers of consumer and commercial debit and prepaid card transactions. For both brands, one new category includes a fraud prevention adjustment fee to the rate, while the other category does not include the adjustment fee.

The announcement can be accessed at www.vantagecard.com/price/interchange05.html .

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