Source: Kansas City Fed
New regulations have pushed down the fees charged to merchants for processing debit card transactions, but the ultimate impact on merchants and consumers may depend on the debit card industry's new revenue strategies, according to the Kansas City Fed.
A detailed review of how the new rules have affected card networks and banks — and how they have begun to respond — shows that fee structures have adjusted, incentives within the industry have shifted, and the market shares of the top card networks have changed. Early signs suggest the interventions achieved some of their intended purpose, fostering increased competition in some areas of the industry. But whether the broader public reaps benefit in the long run will depend, in part, on the results of new revenue-generating strategies adopted by key players in the industry.
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