Recent debit card regulations have transformed market incentives for payments, creating a confusing environment for consumers, according to a press release from Javelin Strategy & Research.
A new Javelin study finds that 73 percent of consumers are satisfied with the debit card option. However, debit card issuers are facing a combined $12.2 billion loss due to new regulations. As a result, many FIs are now steering consumers toward more profitable credit cards.
On the other hand, many merchants who benefit from Durbin-driven reductions in interchange fees are encouraging debit card use, while small-ticket merchants who have seen costs for debit acceptance rise significantly are encouraging the use of cash or other payment options besides debit cards. As a result, consumers are facing an onslaught of conflicting messages about which payment option to use.
Other key findings from the Javelin report, Evolution in Consumer Payments Behavior:
- Cash is the most regularly used payment option: 79 percent of consumers report that they had made a cash purchase within the past seven days.
- 90 percent of consumers claim they would require a discount of 3 percent or more to switch to another payment option.
- 72 percent of underbanked consumers indicate that they most frequently use cash for any type of purchase. Just 6 percent of these consumers use prepaid cards most frequently.
