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Monday, May 14, 2012

U.S. Banks Answer Durbin with Prepaid Cards

FitchRatings released a study showing an increase in the offering of prepaid cards, as banks attempt to offset revenue reduction resulting from implementation of the Durbin Amendment. Prepaid card issuers are not limited by the Durbin Amendment. From the FitchRating press release:
We believe Durbin could, on average, cut potential fees on debit card transactions by one-half.

The impact on card fee generation by Durbin has prompted many banks to impose new fees on ancillary products… As a result, we believe the marketing of prepaid cards or reloadable cards is likely to increase materially, given that under-banked consumers now have fewer payment options available to them.

Card legislation has been significant in recent years and further pressure is expected due to oversight by the Consumer Financial Protection Bureau (CFPB).
Read the FitchRating press release.

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