Banks profit six times their costs as merchants absorb 50% of debit fraud
Processing debit card transactions has become far cheaper for banks over the past 14 years. New data shows the average cost per transaction dropped from $0.08 in 2009 to just $0.041 in 2023. Yet the shift in fraud liability has also changed, with cardholders now bearing a far larger share of losses.
The cost of handling debit card payments varies widely depending on transaction volume. In 2023, high-volume issuers like Fiserv spent only $0.036 per transaction. Mid-volume issuers paid significantly more, averaging $0.121, while low-volume covered issuers faced costs as high as $1.088 per transaction.
Banks have also seen their profit margins on regulated debit interchange fees climb to nearly 500%. For every $0.041 spent on processing, they earn around $0.24 in revenue. This financial shift coincides with a major change in fraud liability.
In 2011, banks covered 59.8% of debit card fraud losses, but by 2023, their share had fallen to 28.3%. Meanwhile, merchants now absorb 49.9% of fraud costs, up from 38.3% in 2011. Cardholders, however, have seen the biggest increase in responsibility—from less than 1.8% in 2011 to 21.8% in 2023.
The data highlights a clear trend: banks now spend far less on processing while earning more from fees. At the same time, fraud losses have shifted away from financial institutions, placing a heavier burden on merchants and consumers. The gap between high-volume and low-volume issuers also remains stark, with costs differing by hundreds of times per transaction.
