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The impact of debit card regulation on checking account fees

Author

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  • Richard J. Sullivan

Abstract

Starting in 2011, when new regulations capped the interchange fees paid to banks for debit card transactions, some news reports predicted banks might increase checking account fees. The cap reduced many banks' revenue and the concern was that they might offset their losses by charging more for checking accounts. Sullivan examines data from broad samples of banks and finds that many large banks raised fees?but among the thousands of smaller banks that had been exempted from the regulations, some raised fees while others lowered them. On net, consumer access to free checking actually increased. The author also explores data on factors that may have driven banks' decisionmaking, including banks' financial characteristics; aspects of the regional market in which they operate; and the degree of competition they face.

Suggested Citation

  • Richard J. Sullivan, 2013. "The impact of debit card regulation on checking account fees," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 59-93.
    • Handle: RePEc:fip:fedker:00003
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    File URL: https://www.kansascityfed.org/documents/931/2013-The%20Impact%20of%20Debit%20Card%20Regulation%20on%20Checking%20Account%20Fees.pdf
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    References listed on IDEAS

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    4. Zhu Wang, 2012. "Debit card interchange fee regulation: some assessments and considerations," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 98(3Q), pages 159-182.
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    6. Fumiko Hayashi & Richard J. Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2, March.
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    Citations

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    Cited by:

    1. Benjamin S. Kay & Mark D. Manuszak & Cindy M. Vojtech, 2014. "Bank Profitability and Debit Card Interchange Regulation: Bank Responses to the Durbin Amendment," Finance and Economics Discussion Series 2014-77, Board of Governors of the Federal Reserve System (U.S.).

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