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Interchange Fees and Payment Card Networks: Economics, Industry Developments, and Policy Issues This paper provides background for understanding interchange fees and payment card networks. It describes the operation of a typical payment card system, presents a summary of the economic theory underlying interchange fees, and discusses various developments in the U.S. payment cards industry, as well as legal and regulatory developments abroad. The paper concludes with a discussion and critical evaluation of a number of potential policy interventions. |
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Board adopts revisions to Payment System Risk policy The Board adopted revisions to the PSR policy designed to improve intraday liquidity management and payment flows for the banking system, while also helping to mitigate the credit exposures to the Federal Reserve Banks from daylight overdrafts. The revisions include a new approach that explicitly recognizes the role of the central bank in providing intraday balances to healthy depository institutions, a fee-based incentive for depository institutions to collateralize overdrafts, and modifications to intraday credit limits. |
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Federal Reserve Bank Check Restructuring Initiative The Federal Reserve Banks began a multi-year restructuring of their check operations in 2003 as part of a long-term strategy to respond to the declining use of checks by consumers and businesses and the greater use of electronics in check processing. By the end of 2009, the Reserve Banks expect to be processing paper checks at one full-service check-processing location, down from forty-five in 2003. |
Last update:
June 12, 2009
