Fed Clarifies Assignment of Transaction Monitoring Costs

The last remaining issue in the merchants’ suit against the Federal Reserve’s debit interchange rule concerns why the Fed determined that transaction monitoring costs fall outside of the “fraud prevention” adjustment to interchange fees. Yesterday, the Fed sent a letter to the judge that explained transaction monitoring costs are akin to the costs of equipment, software or labor when calculating the interchange fee standard and that since these types of costs are necessary to every transaction they should be included in the calculation. [8/11/15]