Key U.S. market surveys, such as PULSE Network’s annual debit issuer survey, are beginning to help the industry quantify the Durbin Amendment’s real impact on the U.S. debit card market.
With interchange income slashed by 55% for regulated issuers, the fact that PIN-debit transactions are now a preferred payment form and debit rewards programs are shrinking, can’t be much of a surprise. This survey, however, also points to unregulated issuers experiencing a slight decline overall in their interchange fee income. This is based on the competitive market dynamic shift towards networks focusing on the merchant’s cost of acceptance, which is about 3%.
In addition, a little-discussed component of the Durbin Amendment is its impact on business debit, which for regulated issuers has effectively wiped out the basis for product enhancements.
From a PULSE press release:
The new cap on debit interchange caused an 87 percent decline in the rate on business debit signature transactions. Business debit transactions were one of the key growth areas for issuers in prior years but are now unprofitable on a per-transaction basis for some issuers. Some issuers surveyed reported network fees that were almost equal to the effective interchange rate. As with consumer transactions, these effects are limited to regulated institutions.
Click here to read more from the press release.