Banks change business models in response to regulations

New reports about ways banks will react to the Fed's proposal to cap signature and PIN debit rates continue to emerge.

According to the Wall Street Journal, U.S. banks are debating letting debit card transactions bounce like checks. And banks may charge more to merchants in order to guarantee debit card payments. While consumers could face bounce fees like they do for checks. Both developments could steer use away from debit cards to other forms of payment not regulated by Dodd-Frank.

In addition it was recently reported that banks are considering a $50 cap on debit card purchases.

Merchants that have relied on ATMs in store to avoid taking credit and debit card payments may soon find this strategy of steering customers to cash more difficult to implement as banks begin to increase ATM fees to $5 and change ATM policies on customers using foreign ATMs.

We've questioned how debit card Interchange regulation will benefit small merchants. And we knew that banks would change business models in response to regulations. None of these developments are good for small merchants.

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