The Durbin Amendment is expected to cause debit cards to drop up to three percentage points off of their annual growth rate over the next five years, according to new research from First Annapolis Consulting Inc.
Consumers will either switch to credit cards or drop their cards all together, DigitalTransactions.net reports. Despite the small decline in usage, however, debit cards are expected to still remain popular with consumers.
The research suggests that high-income consumers are more likely to switch to credit cards while low-income consumers will shift away from traditional banking products due to the increasing fees.
“We’re in the midst of industry re-pricing with the DDA relationship that started with the fee changes and continues with Durbin,” First Annapolis partner Lee Manfred said, according DigitalTransactions.net. “Some consumers on the low end are going to be priced out of the market.”
Manfred said that the marginalization of the lower-end customers could possibly be the worst effect of the post-Durbin industry changes.
First Annapolis used federal-government economic forecasts in addition to data from some clients’ card portfolios and internal analysis for its research. It had to first deduct the growth in debit cards that would have inevitably occurred had the Durbin Amendment not been enacted.
The research also suggests that the shift in consumer behavior away from checks and cash will help drive any lift in debit cards, DigitalTransactions.net reports.