Study: Durbin Will Cause $16B Reduction

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SAN FRANCISCO — A new Javelin Strategy Research report forecasts a decrease of $16.4 billion annually due to both Durbin and recent modifications to Reg E, with a loss of approximately $10.8-billion in FI revenue specifically associated with proposed Durbin revisions.

Moreover, more than half of consumers say they will switch to another form of payment if fees are added to debit cards.

To counteract these revenue losses, the study found that FIs are planning to add or increase existing fees, restructure account offerings, and eliminate or reduce debit card rewards programs. The findings were released in the report, "Payments Regulation and Consumer Expectations: How to Best Manage the Changes Ahead."

"While Congress touts a pro-consumer and pro-merchant message for Durbin and other regulations, our research shows that consumers are skeptical," said Beth Robertson, director of payments research at Javelin. "According to our research, 60% of consumers say that they will switch to another method of payment if FIs charge fees for debit cards."

Javelin survey results confirm that consumers don't perceive that these regulations will benefit them. For example, two-thirds of consumers do not expect to see any reductions in merchant prices based on the lower payment processing costs that merchants may pay when the Durbin regulation goes into effect.

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