Chalk up yet another unintended consequence of the Durbinamendment's interchange cap for debit issuers of over $10 millionin assets: the loss of the ability to pay small bills with a debit card.
|According to media reports, merchants like coffee shops,newsstands, vending machine deployers and others have startedtrying to find ways to get consumers to pay with cash rather thandebit cards after card processors eliminated the interchangediscounts they had offered on transactions of less than $10.
|The loss of the discounts has meant that interchange ontransactions of below $10 has sometimes jumped from 2-3% to almost21%, which is the regulatory-mandated debit interchange cap. Thishas led to merchants offering discounts for consumers who pay incash or, in some cases, deciding to only take cash.
|Should the trend continue, it will represent the most recent andobvious reversal of a tendency to move payments steadily furtheraway from cash and onto cards.
|In the past five years, the ability to pay by debit card hasappeared in the quick-service (fast food) industry, the taxiindustry, and in vending machine sales.
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