Vendors
日本語
search
  2. //
  3. Reports & insights
  4. //
  5. The Unintended Consequences of Regulation

The Unintended Consequences of Regulation

Create a vendor selection project
Click to express your interest in this report
Indication of coverage against your requirements
A subscription is required to activate this feature. Contact us for more info.
Celent have reviewed this profile and believe it to be accurate.
We are waiting for the vendor to publish their solution profile. Contact us or request the RFX.
Projects allow you to export Registered Vendor details and survey responses for analysis outside of Marsh CND. Please refer to the Marsh CND User Guide for detailed instructions.
Download Registered Vendor Survey responses as PDF
Contact vendor directly with specific questions (ie. pricing, capacity, etc)
23 June 2011
Zilvinas Bareisis
Last week I attended Celent's Innovation and Insight Day in Atlanta and had an opportunity to catch up with many of our clients, both banks and technology vendors. One of the banks told me an interesting story how after Reg E came into force, they saw a drop in debit card usage and a significantly increased demand for cash. As many of you know, Reg E requires a customer to opt-in to an overdraft facility for debit transactions at the point-of-sale. The regulation's intention was good - to protect consumers from unexpected overdraft charges. However, the outcome was an unintended steer back towards cash at the point of sale. Many consumers didn't understand the requirement to opt-in and having had their card declined at the POS due to insufficient funds in their current account, lost confidence in shopping with the debit card. If there is no easy way to check balance and there is a risk that the transaction might be declined, then it is easier just to withdraw cash and use that for purchases instead. As a result, the bank is faced with an unexpected increase in costs and efforts to forecast cash demand and replenishing ATM's in time to meet that demand. According to a meeting notice published on its website, the Fed plans to meet on June 29 to discuss "Debit Card Interchange Fees, the Fraud Prevention Adjustment, Routing and Exclusivity Restrictions and related matters". As the Durbin saga is nearing conclusion with the final rules expected to be announced after the meeting, there is a risk that this regulation will also have far-reaching and unintended consequences. Celent has just re-published an Oliver Wyman article series called "Durbin Second-Order Effects". Oliver Wyman's partner Andrew Dresner and the series' author argues that by reshuffling the relative costs between debit, credit and alternative payments, Durbin will have as profound an impact on other actors in the payments ecosystem as it does on debit issuers. Do you agree? Do you have other examples of unintended consequences of regulation?

Comments