The new debit card regulations: effects on merchants, consumers, and payments system efficiency

Public authorities recently intervened in the U.S. payment card industry to address tensions over the growing fees charged to merchants for processing debit card transactions. In this second article of Hayashi's two-part series, the author reviews how regulatory changes have affected merchants, consumers and the overall efficiency of the nation's payments system. ; She finds that competition among card networks for merchants has risen, and the fees imposed on merchants have declined, on average. However, it is too soon to know whether consumers will reap benefit and whether the efficiency of the payments system will rise or fall. ; Much will depend on what steps are taken by banks, networks, merchants and consumers, as all parties continue adapting to the new regulatory environment. Policymakers will need to monitor developments closely and assess their impact on the competition among networks for merchants, on consumer welfare and on payments system efficiency.