Unintended Legislative Consequences May Mean Mini-Boom for ATMs
A small surge in the use of cash and the popularity of ATMs, especially fee-free ATMs, may be among the unintended consequences of the financial reform act that President Obama signed into law earlier this year.
That's because the law contained an amendment sponsored by Senator Richard Durbin that mandated federal regulation of debit card transactions. The amendment's instructions to the Federal Reserve to set an interchange rate for debit transactions drew the most credit union attention and opposition, but credit union ATM experts say other parts of the amendment could also make lasting changes in the ongoing competition between cards and cash.
Jim Park, CEO of the Credit Union 24 ATM and EFT network, largely agreed. Park and Hanisch are of the generation that tends to keep at little cash in his wallet, but Park acknowledged that many younger members of the network's participating credit unions have a different attitude toward cash and cards but that could be at risk.
Whether cash begins to get the upper hand over debit cards will depend on the actions of two separate groups that together introduce a great deal of uncertainty, Hanisch and Park said.
Hanisch speculated that if the exemption from the cap for debit card issuers of under $10 billion succeeds, credit unions might be able to keep their debit cards free of charge to their members, and if banks start charging fees for some debit card transactions, they might have another competitive edge over banks. It wouldn't be impossible for credit unions to start offering their members surcharge-free debit cards in much the same way as they offer surcharge-free ATMs, Hanisch remarked.
Park urged credit unions not to stop working with regulators and politicians to craft the regulations.