The need for interchange regulation, hotly debated by the U.S. Congress for more than a year, ended in the passage of the Durbin Amendment. Not surprisingly, this resulted in U.S. banks implementing “replacement” revenue streams in the form of fees. Price-fixing an industry has never worked and does not work now. The Durbin Amendment’s attempt to do something right for consumers has become detrimental to them. What does it all mean? Consumers will pay more for demand deposit relationships and the debit cards that access them. Some consumers will switch to credit cards. Those who can no longer afford checking … Continue Reading →

While it’s been a long time coming, it looks like EMV is finally headed for the U.S. market. In a recent Aite Group survey of 76 card security risk management executives, the majority of respondents said they believe that EMV will come to the United States sometime in the next five to 10 years.  The survey also tracked emerging bullishness relative to EMV’s prospects. When Aite Group asked a similar population the same question in 2009, 36% believed that EMV would never make it to the United States.  Today, only two years later, the portion that doubts EMV’s chances is … Continue Reading →

This is my fourth Durbin Amendment blog posting since April 2011. Since the Federal Reserve Bank posted the rules, my fury over government price fixing has reached an all-time high. The concurrent political wrangling to sort through the U.S. budget and looming deficit has only compounded my fury. It is clear that elected officials are merely posturing to get re-elected or gain majority power in congress. This is just more evidence that no elected official is truly capable of taking the higher road when it comes to the state of the U.S. economy or our society as a whole. Case … Continue Reading →

The Federal Reserve Bank (FRB) has finally and reluctantly released compliance rules for the Durbin Amendment. It would be difficult to declare anyone a winner in this long-protracted battle; merchants want to eliminate interchange, banks cling on to the old ways of making money, and the once-revered Visa and MasterCard have been stripped of many of their powers. Gone are exclusivity and transaction-routing dominance.  Visa and MasterCard are left with shrinking margins on core transaction volume. Worst off is the consumer. Merchant cost savings will be kept by the merchants, banks will increase the cost of checking relationships, and the … Continue Reading →

Over the last several years, financial institutions have done a grand job of destroying trust and creating angst among the consumers they serve and the public at large. I rarely meet a person today that does not have a story about how badly they have been treated by a bank or how hard it is to borrow money. No one is shedding a tear for the banks. On the heels of the financial collapse has been an onslaught of financial reform from powerful legislators such as Chris Dodd, Barney Frank, and Dick Durbin. Who is all this reform really protecting? … Continue Reading →

The U.S. Federal Reserve has released its proposal for debit card interchange rate changes, and proposed a flat rate of 12 cents (US$) per transaction. The U.S. Public Interest Research Group (USPIRG) issued a press release claiming the following: ”The proposed regulations will benefit consumers by lowering the billions of dollars annually in non-negotiable swipe fees paid by merchants to large banks and the dominant credit card networks. These changes will lower the prices of everyday goods for all consumers including cash customers.” My take:  The impact on the average U.S. household — if any — will be negligible. I’d love … Continue Reading →