Traditionally, financial institutions have reacted to lost income by increasing fees, as Bank of America recently did by charging customers a $5/month fee for using their debit card. The financial institutions have been able to do this because they knew their customers had no other alternatives. However, this is no longer the case, as companies such as Google, PayPal, and Square are providing alternatives to the traditional methods of banking. With the Durbin Amendment to the Dodd-Frank legislation reducing per transaction fees on debit cards from approximately 44 cents to below 25 cents, this legislation may be what leads Americans to decrease their current dependence on banks and payment cards.
…years from now, we may owe a debt to reforms like Dodd-Frank for finally weaning us off the physical wallet and encouraging us to experiment with the new technologies helping to create the Digital Wallet. Why carry around a wallet full of plastic when your smart phone or tablet can do the same thing? Better yet, why pay higher fees for financial services when technology will soon make it possible to get a similar service at a cheaper rate?
