Of Special Interest
Filters
- Newslink Trends-The Global Strategic Perspective
- Juniper Research says digital wallet users to exceed 4.4 billion by 2025, as mobile drives digital payments’ revolution
- Criminals exploit COVID-19 pandemic with rise in scams targeting victims online
- Equifax says Open Banking proving pivotal to pandemic lending
- Consumer confidence in banks, credit card providers and investments remain stable as demand supercharges digital finance says Toluna research
- Mintos says Europeans are starting to embrace investing
- US banks see IT modernisation as a way to improve customer experience
- Risk mitigation in global trade depends on digitisation-Andrew Raymond, CEO, Bolero International comments
- Juniper Research new study says the volume of B2B payments facilitated by non-banks will exceed 53 billion in 2022, from a COVID-related low of 38 billion in 2020
- CMA issues fifth publication over 3 years of the service quality league table of personal and business current account providers
- Barclays says scammers take advantage of COVID-19, cashing in on nations’ uncertainty
- S&P Global report says financial market infrastructure sector's earnings likely to cool off In second half
- Global banking market capitalisation slumps by over 30% amid pandemic says Buyshares research
- Digital wallet spend in Europe & North America to increase by 40% in 2019, finds study
- Juniper forecasts mobile money transactions will exceed 200 billion by 2024
- Banks can save the world from climate change, says former UN climate chief
- Research by NatWest reveals gender divide over attitudes to saving
- Europe’s big bank problem: too much capital is trapped in the US, says Scope
- Later-Life lending market set to almost double in the next 10 years, finds report
- Barclays/Cebr report challenges nation to think differently about wealth
- Fifth of UK investors looking to debt investment, new research reveals
- Regtech will play a more important role in PSD2, says Mitek
- Banks turn to Fintech partnerships to improve customer experience, finds Fraedom
- New industry code to tackle fraud must deliver, says Which?
- New TTF report highlights loss of trust in financial services
- Arxan highlights financial app vulnerability epidemic
- SAS asks whether banks really need to choose between operations and innovation
- Which? raises alarm as almost 1,700 free ATMs become fee-charging
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
15th July 2011
Durbin will cap more prepaid cards than expected
Opinion
In its final rules relating to the Durbin Amendment to the Dodd Frank Act the Federal Reserve has ruled significantly more prepaid cards will have their interchange fee capped than anticipated. The Fed has acted to close a potential loophole relating to the hybrid prepaid card / bank accounts that are growing quickly in popularity. These accounts have most, if not all, of the features of a check / current account allowing users to make payments from the accounts by other means to pay bills and sometimes write cheques. It is argued that cards connected to such accounts whilst described as a prepaid card serve the same utility as a debit card and have been referred to as a 'de-coupled debit card'.
The ruling was buried within a 378 page document of rules issued by the Fed. The cap, which only applies to banks with over $10bn in assets, comes into force on October 1st of this year. The ruling allows exemption to prepaid cards only if the issuer "refrain from charging overdraft fees, allow the first ATM transaction each month to be free, and not allow underlying funds to be accessed by any means other than the card itself". The first two of these conditions were included in the draft rules issued at the end of 2010 however what is new is the limitation on account access.
Some banks claimed this may limit banking services to the "credit-challenged". It remains to be seen whether the cries of pain by the retail banks in regard to Durbin actually result in a change to their product line up and promotion of not. The cap will halve the average interchange fee received by the banks. But, and it is a big but, at 21 cents plus 0.05% the banks will continue to make anything from 100% to 300% transaction profit after including fully expensed overhead depending on what model you believe. It is true that some customer service and marketing costs may be outside of that figure, again dependent on whose model you believe. However a $10bn+ asset bank is likely to be able to build a card portfolio that makes these costs a small additional burden per transaction. Banks must also remember that debit card accounts for a greater value of retail payments than any other payment form and their share of total retail payments is continuing to grow.
An interesting question is how Durbin may be applied to mobile payments?