Coinstar Inc., the parent company of DVD-rental firm Redbox, will see reduced fourth-quarter profits as a result of Dodd-Frank’s increase in debit card processing fees for small transactions.
Redbox, which accounts for close to all of Coinstar’s revenue at 84 percent, took a massive hit from the controversial rule. Based in Washington, Coinstar Inc. is expected to report a 7.1 percent decrease in net profit from $22.42 million last year to $20.93 million, according to Reuters analysts. Coinstar’s revenue is expected to increase, however, from $396.76 million to $496.41 million, a 25 percent increase from last year, according to IBTimes.com.
While the legislation was intended to help merchants reduce costs, there have been unintended consequences. Retailers who sell mostly low-priced goods, such as coffee and DVD rentals, pay the same amount on debit card transactions as a retailer who sells high-priced goods, like televisions and computers.inflatable double slip and slide with pool
According to International Business Times, Redbox now pays 27 cents more on each debit-card rental, up nine cents from before the enactment of Dodd-Frank. In response to the fee increase, Redbox increased rental fees from $1 to $1.20 on DVD rentals in October and online rentals in January, IBTimes.com reports.
Coinstar will report actual figures on Monday after markets close.