As reported in the WSJ today, the Fed is proposing new debit card rates for non-exempt banks (ie over $10B in assets), further reducing the debit cap from $0.21 + 5bps.
Fed Proposing New Rates for Durbin
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Tag Archives: Durbin
FRB Durbin in eCom
Short Blog
I’ve had quite a few inbound calls on Durbin and Debit in eCom so I thought it was time for a short blog. Note this is my 90% confidence view talking to 3 of the top retailers and 2 of the top processors.
Short Blog – Key developments this week
I hope to finish part 2 – Power of Bank Networks tomorrow (12-15 pages). In the meantime I have to recap a few key developments this week.
Continue readingDurbin 2 – Short Update
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What are the new Durbin’s legislative prospects? A: Not at all likely (<10% probability)
Top retailers spent this week meeting with Bank CEOs trying to convince them to support the new Durbin legislation. Their pitch was to enable bi-lateral deals, “new products” and avoid network rules (see blog). Banks did not seem to bite, as they remembered the lessons of Durbin 1:
- Only largest merchants benefited from dual routing
- Consumers lost in debit rewards (ie keep the change), increased bank account fees, and no merchant pass-through of savings
- Acquirers/processors did not pass through fee reductions to most merchants
- Networks recovered lost revenue through merchant fees
- Large banks lost competitive advantage as smaller “exempt” banks under $10B operated under different rules
- See WSJ article
Driving Vision of Durbin? Bi-Lateral Connections?
I now have 70% confidence in the forces shaping Durbin (still no threat to V/MA).
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Durbin 2 – Impact on “Wrapping” Rules?
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A highly technical “what if” scenario involving a long-sought after change by top US card issuers. I’m fortunate to have the exec teams of just about every payment network, processor and FinTech read this blog. I have 3 main drivers for writing today:
- Start a community discussion
- Assess the potential for a much more strategic driver behind the proposed Durbin bill
- Most “change” in US payments is driven by 7-10 players: networks, top issuers, Google, Apple, … etc. These changes have an enormous impact on the FinTechs building around them. I’m hoping to help these small companies plan around these changes as the only advantage of a start is speed.
Note I DO NOT think this scenario is likely, but rather possible (30% probability). Historical context is key and the only reason I’m spending time on this today is that 27 bank CEOs have been discussing this for over 10 yrs.