Online Debit Poised for More Competition
Competition for online debit transaction routing is expected to blossom now that the Federal Reserve has clarified that regulations guaranteeing debit routing choice extend to online transactions. Bloomberg Law cites 2019 data from the Federal Reserve, showing that only 6% of online and other card-not-present debit transactions are routed over EFT networks. In contrast, 40% of in-person card-present transactions are routed through these networks. Rule change proponents say competition will help lower transaction costs for merchants and consumers.
PULSE Perspective: Increased competition for debit routing – whether online or at the point-of-sale – is healthy for the entire debit ecosystem.
Businesses Leary of Fintechs
A recent survey by BNY Mellon and Aite-Novarica Group found most businesses prefer partnering with a bank for their payment solutions over a third-party financial technology partner. ABA Banking Journal reports businesses tend to be concerned about the stability of fintechs and what the options and implications would be if a fintech were to shut down abruptly. Among respondents who partner with a fintech, the most-cited reason was “more payment options.”
PULSE Perspective: In communications with businesses, institutions would be wise to emphasize their rock-solid stability and long-term service to the community, in addition to innovative services.
Cash Payments Down Again
The Financial Brand reports on a Gallup study that found six in ten respondents say they make “only a few” or no purchases with cash today. That’s doubled over the past five years, while the percentage who say they make “all” or “most” of their purchases with cash has dropped to just 13% from 28% during the same period. Gallup attributed this change to online shopping, higher electronic payment acceptance and an increase in self-checkout and mobile payment options.
PULSE Perspective: To compete with fintechs in a “less cash” future, banks must have advanced digital capabilities while continuing to accommodate their cash-loving customers.