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Could the most common form of U.S. consumer payment outside of cash vanish from stores?
Doubtful. But a December report by consulting house Oliver Wyman says that nearly $12 billion in debit interchange revenue could pull a Houdini if the Fed's debit fee rules are enacted as drafted. With some 40 billion debit card transactions performed annually that $12 billion represents a drop from about $ .44 a transaction to at most $ .12 according to the report.
Before you start doing the sack dance over a prone and prostrate banking industry, think about this. That $12 billion helped a lot of banks subsidize consumer services. Like free checking. As banks scramble to replace this lost debit card revenue with more fees on consumers, expect free checking to vanish along with other banking services normally taken for granted.
Not only that, but the "viability" of some smaller institutions could be under the gun, according to a press release announcing the report. Another potential vanishing act.
Nor do large banks get a hall pass on this one. An active consumer debit card will deliver about $87 a year for these institutions, according to the consultants, who figure that number could get shaved to $24 when the law goes into effect.
I don't know many businesses large or small that could see their revenue per customer drop that much and still stay in that business.
There is little doubt. If enacted as proposed, the Fed's regulations could have "massive and far-reaching consequences" for retail banks, says report author Tony Hayes. More importantly, those effects could be felt by the very consumers the law was written to protect.
And what about the consumer who believes that Congress can actually write laws-without adverse effects-to protect him? He could be the biggest vanishing act of all.
Doubtful. But a December report by consulting house Oliver Wyman says that nearly $12 billion in debit interchange revenue could pull a Houdini if the Fed's debit fee rules are enacted as drafted. With some 40 billion debit card transactions performed annually that $12 billion represents a drop from about $ .44 a transaction to at most $ .12 according to the report.
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| Oliver Wyman Report on Debit Cards |
Not only that, but the "viability" of some smaller institutions could be under the gun, according to a press release announcing the report. Another potential vanishing act.
Nor do large banks get a hall pass on this one. An active consumer debit card will deliver about $87 a year for these institutions, according to the consultants, who figure that number could get shaved to $24 when the law goes into effect.
I don't know many businesses large or small that could see their revenue per customer drop that much and still stay in that business.
There is little doubt. If enacted as proposed, the Fed's regulations could have "massive and far-reaching consequences" for retail banks, says report author Tony Hayes. More importantly, those effects could be felt by the very consumers the law was written to protect.
And what about the consumer who believes that Congress can actually write laws-without adverse effects-to protect him? He could be the biggest vanishing act of all.
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