The federal government is poised to impose price controls that will shift merchants’ operating costs for accepting debit cards to consumers. This will result in higher fees for consumers for debit cards at the same time that they are becoming increasingly popular with consumers.
According to a study released last week by the Federal Reserve, the use of debit cards grew by almost 15 percent from 2006 to 2009. Almost 38 billion debit card payments with a total value of $1.5 trillion were made during these four years. By contrast, the use of credit cards declined by 0.2 percent a year during the same period.
The irony is that this huge increase in the popularity and use of debt cards has occurred at the same time that the new Dodd-Frank Act has mandated that debit card interchange fees be regulated. Those regulations, which are being developed by the Fed, are expected to increase the cost of debit cards to consumers and, therefore, make them less likely to be used in the future than they are now.