US Debit Interchange Regulation: How Big of a Deal Is It?

by Zilvinas Bareisis, May 25, 2010
Industry Trends
North America

Abstract

On May 20, the US Senate passed a Financial Regulatory Reform bill. One of the amendments gives the Federal Reserve rights to limit interchange fees for debit card transactions, an unprecedented move in the US cards market.

In a new client briefing, US Debit Interchange Regulation, Celent examines the likely impact of the new debit card interchange regulation on the US cards industry.

This client briefing discusses the likelihood of interchange reduction actually happening, the likely winners and losers if it does, and what card issuers should do to prepare.

“Large merchants are the most likely to benefit from this new regulation,” says Zilvinas Bareisis, the author of the briefing. “While there is uncertainty over the extent and speed of debit interchange reduction, given this, Reg E and other recent developments, the debit card issuers should start preparing for a new world with a lot more pressure on their traditional fee structure.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

US Debit Interchange Regulation...How Big of a Deal Is It?

4

 

Will Interchange Cuts Really Happen?

5

 

Who Will Be the Winners and Losers?

6

 

What Should Card Issuers Do?

8

Leveraging Celent’s Expertise

9

 

Support for Financial Institutions

9

 

Support for Vendors

9

Related Celent Research

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