PULSE Survey Finds Small-Asset Issuers Taking Losses From Durbin
A survey that covers almost half of U.S. debit traffic shows that small-asset debit card issuers are taking losses stemming from regulations implementing the Durbin Amendment.
The 2013 Debit Issuer Study is the eighth one the debit/ATM network has sponsored and was conducted in partnership with financial consultancy Oliver Wyman.
The amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act capped debit interchange for issuers with over $10 billion in assets but was supposed to not affect the debit interchange income of smaller asset issuers.
But the survey found that so-called exempt issuers saw a decrease of $0.02 in their interchange rates from both types of debit transactions in 2012: those that are validated by cardholder signature and those validated by PINs.
One in three small asset issues also responded that they expected to see further debit interchange declines in 2013.
The question of how much of an impact the Durbin Amendment had on small issuers has been the subject of ongoing dispute.
PULSE said that 64 of its approximately 6,100 participating financial institutions –
participated in the survey including large banks, credit unions and community banks – and that 26 of the 64 were institutions of over $10 billion in assets.
PULSE reported that, taken together, survey participants issue 140 million debit cards and operate 78,000 ATMs; these cards performed 21 billion annual transactions, representing approximately 45% of total U.S. debit transactions, adding that the sample was representative of the U.S. debit market in terms of institution type, location and debit network participation.
Even with the interchange cut, however, the surveyed institutions reported that their debit programs kept growing, largely because consumer use of debit kept growing.
"The post-Regulation II era represents an important time for the debit industry, and the latest Debit Issuer Study provides a comprehensive look at what changes issuers are making in response to this environment," said Steve Sievert, executive vice president of marketing and communications for PULSE. "Even in the face of significant regulatory challenges, issuers managed to grow their debit volumes in 2012 and expect further growth this year,” Sievert said.