Say Goodbye to Debit Cards
Originally Published on March 11, 2011.
We’ve been saying it since December 2010, that Debit cards will cease to exist when the new Wall Street reform laws go into effect. On February 18th, we argued that the cost of a debit card transaction would shift from the retailer to the customer. You can view that article here: Debit Card Costs May Be Put on The Consumer – Don’t Make us Pay!.
We were right on the mark. Today JPMorgan Chase announced that debit card carrying customers would soon be subject to a purchase cap of $50 – $100 per transaction. As a result, a huge chunk of the U.S. population would no longer be able to make an average size purchae. The new video game system? Too big. A computer? Too much money. A bar tab? Better bring cash…
The reason for such a dramatic change was provoked by Debit card reform. In July 2011, the Federal Reserve will begin enforcing a maximum debit card transaction cost of 12 cents. For card issuing banks, payment networks, acquirers, and ISOs, this 12 cents is too low to be profitable, let alone sustainable. As a result, banks must make up for the loss by charging consumers.
For more information, check out the CNN article.
– deBankedLast modified: February 21, 2013
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.