IDEAS home Printed from https://ideas.repec.org/a/fip/fedker/y2012iqivnv.97no.4x3.html
   My bibliography  Save this article

The new debit card regulations: initial effects on networks and banks

Author

Listed:
  • Fumiko Hayashi

Abstract

American consumers are using debit cards more than ever before, triggering key changes in the payment card industry and affecting how banks and merchants do business. ; Controversy has arisen as the industry raised the fees it charges on merchants for debit transaction processing?fees that merchants may pass on to consumers, affecting the prices that consumers pay for goods and services. Congress and the Justice Department have stepped in with rules to cap certain fees and promote competition among card networks. ; In this first article of two, Hayashi finds the new regulations and legal framework have caused distinct shifts in the revenues, incentives and market shares of both banks and card networks. Early signs suggest network competition among networks for merchants has risen, but the outlook for merchants and consumers may hinge on new revenue strategies adopted by the industry.

Suggested Citation

  • Fumiko Hayashi, 2012. "The new debit card regulations: initial effects on networks and banks," Economic Review, Federal Reserve Bank of Kansas City, vol. 97(Q IV).
    • Handle: RePEc:fip:fedker:y:2012:i:qiv:n:v.97no.4:x:3
    as

    Download full text from publisher

    File URL: https://www.kansascityfed.org/documents/936/2012-The%20New%20Debit%20Card%20Regulations:%20Initial%20Effects%20on%20Networks%20and%20Banks.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert M. Adams & Kenneth P. Brevoort & Elizabeth K. Kiser, 2007. "Who Competes With Whom? The Case Of Depository Institutions," Journal of Industrial Economics, Wiley Blackwell, vol. 55(1), pages 141-167, March.
    2. Andrew M. Cohen & Michael J. Mazzeo, 2007. "Market Structure and Competition among Retail Depository Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 60-74, February.
    3. Fumiko Hayashi, 2003. "Community bank access to payment card networks : has it become more expensive?," Payments System Research Working Paper PSR WP 03-02, Federal Reserve Bank of Kansas City.
    4. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fumiko Hayashi, 2013. "The new debit card regulations: effects on merchants, consumers, and payments system efficiency," Economic Review, Federal Reserve Bank of Kansas City, vol. 98(Q I), pages 89-118.
    2. Mark D. Manuszak & Krzysztof Wozniak, 2017. "The Impact of Price Controls in Two-sided Markets : Evidence from US Debit Card Interchange Fee Regulation," Finance and Economics Discussion Series 2017-074, Board of Governors of the Federal Reserve System (U.S.).
    3. Kay, Benjamin S. & Manuszak, Mark D. & Vojtech, Cindy M., 2018. "Competition and complementarities in retail banking: Evidence from debit card interchange regulation," Journal of Financial Intermediation, Elsevier, vol. 34(C), pages 91-108.
    4. 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.
    5. Singh, Nidhi & Sinha, Neena, 2020. "How perceived trust mediates merchant's intention to use a mobile wallet technology," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    6. 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.).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nathan H. Miller, 2008. "Competition When Consumers Value Firm Scope," EAG Discussions Papers 200807, Department of Justice, Antitrust Division.
    2. Dean F. Amel & Robin A. Prager, 2016. "Community Bank Performance: How Important are Managers?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(2), pages 149-180, March.
    3. Melzer, Brian T. & Morgan, Donald P., 2015. "Competition in a consumer loan market: Payday loans and overdraft credit," Journal of Financial Intermediation, Elsevier, vol. 24(1), pages 25-44.
    4. Meslier, Céline & Risfandy, Tastaftiyan & Tarazi, Amine, 2017. "Dual market competition and deposit rate setting in Islamic and conventional banks," Economic Modelling, Elsevier, vol. 63(C), pages 318-333.
    5. Alfredo Martín-Oliver, 2018. "Bank Competition with Financing and Savings Substitutes," Journal of Financial Services Research, Springer;Western Finance Association, vol. 54(2), pages 207-241, October.
    6. Antonis Michis, 2013. "Measuring Market Power in the Banking Industry in the Presence of Opportunity Cost," Working Papers 2013-1, Central Bank of Cyprus.
    7. Joseph Kuehn, 2020. "Strategic Complementarities in Bank Branching Decisions," Journal of Industrial Economics, Wiley Blackwell, vol. 68(4), pages 640-692, December.
    8. Carlos Pérez Montes, 2013. "The impact of interbank and public debt markets on the competition for bank deposits," Working Papers 1319, Banco de España.
    9. Ni Zhan, 2021. "Where does the Stimulus go? Deep Generative Model for Commercial Banking Deposits," Papers 2101.09230, arXiv.org.
    10. Dean F. Amel & Robin A. Prager, 2014. "Community Bank Performance: How Important are Managers?," Finance and Economics Discussion Series 2014-26, Board of Governors of the Federal Reserve System (U.S.).
    11. Dai, Mian & Yuan, Yuan, 2013. "Product differentiation and efficiencies in the retail banking industry," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 4907-4919.
    12. Weining Bao & Jian Ni, 2017. "Could Good Intentions Backfire? An Empirical Analysis of the Bank Deposit Insurance," Marketing Science, INFORMS, vol. 36(2), pages 301-319, March.
    13. Antonis Michis, 2013. "Measuring Market Power in the Banking Industry in the Presence of Opportunity Cost," Working Papers 2013-01, Central Bank of Cyprus.
    14. Ho, Katherine & Ishii, Joy, 2011. "Location and competition in retail banking," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 537-546, September.
    15. Robert M. Adams & Jacob Gramlich, 2016. "Where Are All the New Banks? The Role of Regulatory Burden in New Bank Formation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(2), pages 181-208, March.
    16. Ho, Chun-Yu, 2012. "Market structure, welfare, and banking reform in China," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 291-313.
    17. Mark D. Manuszak & Krzysztof Wozniak, 2017. "The Impact of Price Controls in Two-sided Markets : Evidence from US Debit Card Interchange Fee Regulation," Finance and Economics Discussion Series 2017-074, Board of Governors of the Federal Reserve System (U.S.).
    18. A. Yeşim Orhun & Sriram Venkataraman & Pradeep K. Chintagunta, 2016. "Impact of Competition on Product Decisions: Movie Choices of Exhibitors," Marketing Science, INFORMS, vol. 35(1), pages 73-92, January.
    19. 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.
    20. Mattia Girotti & Richard Meade, 2017. "U.S. Savings Banks' Demutualization and Depositor Welfare," Working Papers 2017-08, Auckland University of Technology, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2012:i:qiv:n:v.97no.4:x:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Zach Kastens (email available below). General contact details of provider: https://edirc.repec.org/data/frbkcus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.