Coping With Debit’s Cloud Of Uncertainty

By Pete Rizzo (@pete_rizzo_)

Financial institutions were just settling into the new regulatory environment created by the Durbin Amendment’s Regulation II when Judge Richard Leon’s unexpected ruling swiftly upended the sector this July. Since then, the debit industry can best be described as uncertain.

That’s the defining word of the time according to Steve Sievert, executive vice president of marketing and communications at payments services provider PULSE. In addition, Sievert predicts this “cloud of uncertainty” may not be going away anytime soon.

Sievert describes the current debit industry environment as one where, both interchange-regulated institutions and exempt interchange institutions, face a lack of clarity that is creating new obstacles that don’t yet have easy solutions.

“It makes it difficult in some instances to continue to look for ways to innovate to look for ways to invest in the debit business,” Sievert told PYMNTS.com.

However, Sievert said that PULSE plans to adjust its offerings to continue supporting debit through this period, using a three-pronged approach that it believes will best serve the market.

For more on how PULSE is responding to the uncertainties of the post-Durbin world, as well as what’s next, PYMNTS.com spoke to Sievert at this year’s Money2020 in Las Vegas to get the exclusive scoop.

PYMNTS.com: How is PULSE prepared to support the FI industry in the wake of Judge Leon’s ruling? (Jump to 2:08)

Steve Sievert: We have a three-pronged approach in terms of how we are supporting our FIs through this period of uncertainty. It stems around things like keeping them informed.

We’re also taking steps to, where we can and when its possible, contribute to this process in terms of serving as a resource of information, whether it be for the Fed or others who need some additional information about regulations and how the debit industry works.

The third part of that three-pronged approach is developing solutions that will provide options for our FIs that maximize the value of debit, regardless of how the landscape takes shape in the future. What I mean by that is developing specific products and services that will help them continue to maximize the overall value of debit, continue to manage their debit business, and most importantly, continue to grow their debit businesses in the future.

PYMNTS.com: What does the “new normal” mean for FIs in the debit industry? (Jump to 4:17)

What that means is lower interchange revenue for FIs, so there is for example less money to potentially invest in these businesses going forward. The other key part of the new normal is better understanding the overall economics of a debit card program for an FI, because now they’re being required to participate in multiple networks as it relates to one portion of Regulation II.

It really does boil down to small margins, more compressed margins because of the squeeze on interchange, and then also the dynamics of having to participate in multiple debit networks.

PYMNTS.com: How do you see debit evolving in a digital world? (Jump to 7:15)

You’re going to see the blurring of the lines between PIN and signature going forward and to a certain extent that is already happening at the point-of-sale (POS).

When you go to a merchant location, credit card companies for years have had a rule in place where if a purchase is under a certain dollar amount, you can simply swipe the card and go without having to sign for it. You’re beginning to see the emergence of that type of transaction in the debit space as well. That is the type of transaction we’re supporting at PULSE.

For more on how PULSE is rolling out PINless POS transactions, as well as how it is sees mobile impacting the debit space, listen to our full podcast with Sievert below.

*If you have trouble with the audio player above, click here.

Steve Sievert, Executive Vice President of Marketing and Communications, PULSE

Steve Sievert serves as Executive Vice President of Marketing and Communications for PULSE, a Discover Financial Services company and operator of the PULSE® electronic funds transfer (EFT) network, headquartered in Houston, Texas. PULSE is the one of the nation’s leading debit/ATM networks, currently serving thousands of banks, credit unions and savings institutions across the country. The network links cardholders with ATMs and point-of-sale terminals at retail locations nationwide. PULSE is also a valued resource for consumer research related to electronic payments and is committed to providing its participants with education on evolving products, services and trends in the payments industry. 

Mr. Sievert joined PULSE in 2007 and is responsible for managing communications, marketing, and public-relations activities for the company. He also oversees the network’s professional development and training programs, and PULSE’s brand-development initiatives. Mr. Sievert has 25 years of communications and marketing experience, working for both publicly traded and private companies, including Compaq Computer Corporation, Texas Children’s Hospital, US Oncology and Baylor College of Medicine. He began his career as a broadcast journalist in radio and television, and was a sports reporter and columnist at the Houston Chronicle.

Mr. Sievert is a graduate of the University of South Carolina with a Bachelor of Arts in Journalism.