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Durbin Amendment and Lost Revenues

January 20, 2011

Durbin Amendment

The Durbin Amendment will lead to significant revenue losses for banks.  This crushing blow to the FI industry comes at a time when banks are already facing several significant challenges.

“Based upon the draft rules, debit interchange revenue for regulated card issuers will decline by 73%, from an average of $0.44 per transaction today to, at most, $0.12 per transaction, as of July 21, 2011. Furthermore, the proposed rates do not distinguish between signature debit and PIN debit, meaning that the revenue differential between these two forms of debit use is likely to decline or disappear. For the banking industry, almost $12 BN of non-interest revenue will vanish from the system.” – from oliverwyman.com

One approach for banks to take that will help replace these lost revenues with cost savings, is to implement retail branch business intelligence, which will  improve operational efficiencies.  For example, FMSI’s The Teller Management System™ provides bank managment with decision-support intelligence.  By scheduling tellers and distributing sophistacated staffing reports based on forecasted transaction volumes, The Teller Management System™ helps banks gain better control of labor costs while increasing service levels.

3 Comments leave one →
  1. February 18, 2011 4:48 pm

    *Update*

    From American Banker –

    “Having nudged lawmakers to reconsider interchange caps, card issuers and payments networks are weighing the ramifications of another, less-discussed part of the Durbin amendment: so-called steering rules.

    The Federal Reserve Board’s proposals enforcing the amendment to the Dodd-Frank Act would require some issuers to add networks to their cards as well as prevent them from inhibiting retailers’ freedom to route transactions over the network of their choosing. The intent is to give merchants more power over their costs — a clash with issuers’ interest in using the networks that garner the highest interchange.

    The Fed’s proposal could shift transaction volume away from Visa Inc. to MasterCard Inc., as well as to smaller competitors that operate PIN-debit networks.”

    See full article here: http://www.americanbanker.com/issues/176_34/steering-interchange-1033151-1.html?ET=americanbanker:e5869:2275462a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=ABLA_Daily_Briefing_021711

  2. April 25, 2011 2:38 pm

    *Update*

    From: http://newsok.com/debate-rages-over-debit-fees/article/3561458

    “Fed Chairman Ben Bernanke told congressional banking committee leaders that the board was still committed to having the rules in place by July 21.”

Trackbacks

  1. Alarming Banking Fee Trends Highlighted in New Report « FMSI VantagePoint Blog

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