With all that has happened last week in terms of the Durbin Amendment we’re still making heads and tails of what this will mean.
Right from the moment the new .21 cent fee was announced, we immediately identified consumers as the loser in this battle.
As our co-CEO Henry Helgeson stated, “consumers will now pay for Wal-Mart’s discounts.”
Consumers are also going to lose out when they go to the bank. Goodbye free checking, instead say hello to a monthly maintenance fee. But this fee imposed by banks won’t affect everyone. If you’ve got a big chunk of cash in the bank, you’re safe. The bank doesn’t want to lose your business. But if you’re the person who lives paycheck to paycheck, you’re going to get to know that fee pretty well.
The consumer will also suffer the loss of enhanced security. The change in the “swipe fee” means that PIN debit is no longer the most cost effective means for running a transaction, and therefore will push merchants to lean toward signature debit. Just like when paying with a credit card, you’re now going to have to sign a receipt. Not only does this transaction take a little longer, it’s also less secure as PIN debit required consumers to punch in their 4-digit pin. That pin was sent over a secure line, but now we’re back to a signature, and we know how easily those can be forged.
We’re also hearing that the new regulation might speed up the development of NFC and other forms of payment. While we like the concept of these new payments methods, we’re not sure this technology will move any faster toward adoption.
As we’ve been saying for a few months now, old habits die hard and in order for consumers to use a technology like NFC, they first have to have the phones that are enabled to do this, as well as be comfortable swiping their mobile device. Merchants will also have to purchase the upgraded infrastructure to accept these payments, and if they think a .21 cent fee on a transaction is a bitter pill to swallow, well, wait until they have to start swapping out their technology.
Once again, the government has placed us all in a wait-and-see mode.