A recent survey by industry analyst Javelin Strategy and Research reveals that most consumers believe that debit card regulations like the Durbin Amendment actually benefit banks, demonstrating the mixed-message environment for consumers when it comes to payment methods.
“[Financial institutions] especially took a big public relations hit in the last quarter of 2011 when they lost the opportunity to educate their customers about these new regulations, then attempted to impose measures that consumers felt were punitive,” the report says. “”As a result, 70 percent of consumers believe that recent debit card regulations will actually benefit banks, whereas only 30 percent believe that the regulations will benefit merchants.”
The Javelin survey also found that consumers still prefer debit cards but would use them less if banks began to charge a usage fee. If that were the case, 32 percent of consumers would use cash instead, 25 percent would pay with a credit card and 26 percent would switch to a different bank that didn't charge a usage fee.
According to Javelin, banks have, up until recently, encouraged consumers to use debit cards, as it was a profitable aspect of business for banks.
Now, however, banks face billions of dollars in revenue losses due to the introduction of the Durbin Amendment, which caps fees merchants must pay to banks in order to process a debit transaction.
Banks have responded by encouraging the use of more profitable credit cards. Not all merchants benefit equally from the new fee caps, however, encouraging some to toss out the debit payment method altogether.