No longer able to make as much money from processing debit card transactions due to new regulations, banks are expected to start increasing their bottom lines by coaxing customers into using prepaid cards and signing up for credit cards.
Reuters reports that execs from several banks say they will move to a plethora of back-up options to make up for lost revenue. Under a new law that caps the amount banks can charge sellers for processing debit card purchases at 21 cents — about half of the previous average — the industry could lose $8 billion.
Because the caps don’t apply to prepaid or credit cards, banks will try to encourage customers to use them. Bank executives said they may also slap fees onto overall accounts, rather than going the Bank of America route, come up with debit/credit card hybrids that skirt the new law and sell transaction data to merchants.
U.S. banks to push prepaid, credit cards [Reuters]