The battle for the share of wallet: the aftermath of Durbin

By Parker Burke

When the Durbin Amendment cleared its final hurdle on June 8, 2011 and the subsequent Fed ruling was made on June 29, 2011 limiting debit interchange fees to $0.21 and .05% per transaction, retailers across all industries were relieved at the reduced interchange, but disappointed that the Fed had not done more.  However, cutting debit interchange by more than half would no doubt save retailers a ton of money, wouldn’t it?

While many regard the battle for “swipe fee reform” as a draw, the new battle for the share of wallet is merely beginning. The card companies have already lobbed their initial salvos to change consumer behavior towards using credit for everyday purchases by enhancing credit card rewards and slashing debit card rewards and benefits.

Without innovative action to counter enhanced “credit card rewards” programs, retailers could actually lose out on the savings associated with debit swipe fee reform: fees will indeed be reduced, but incidence of usage may also decrease, driving consumers to higher cost credit cards. 

Creativity is the name of the game here and retailers that benefit from this legislation will be the ones who steer their customers towards lower cost forms of payment.  How can you be successful?  It may not be as difficult as you first imagine: first, determine what is important to your customers; then, take that information and provide them with something of value in return.  It is that simple!

-          2 cents off gas!

-          Free coffee!

-          Double rewards!

-          Free car wash!

As new payment technologies continue to emerge, successful retailers will also need to remain at the cutting edge of the payment experiences their customer’s value.  While still in its infancy, mobile payments will be one of these experience, allowing retailers to not only serve the demands of the growing tech-savvy market, but also steering them to lower cost forms of payment.

As the battle for the share of wallet heats up, what other methods do you think successful retailers can use to incent lower cost forms of payment in-store and at the pump?






Here's a great new article about staying connected via mobile payment: http://www.retailtechnology.csnews.com/top-story-constant_connectedness-283.html