Pencils are down and the exams have been graded. We wanted to share with you the results of the Debit 101 Exam to date. We will keep this exam open for the remainder of the week and encourage all students to participate.
Question 1: What do you think has been the primary driver of growth in electronic deposit access?
a) Consumers have always wanted to pay with deposit funds. Debit cards finally made that easy, convenient, and ubiquitous. (69%)
b) Banks and brands have spent millions promoting debit cards because they make so much money on them. If they didn’t, we’d still be using cash and check at retail (13%)
c) Merchants have driven consumers to pay with debit, primarily PIN, because it is more efficient and more effective for them than managing paper money (6%)
d) Legislative and regulatory provisions, enforced by the Fed, made it more attractive for the industry to move to electronic payments (13%)
Question 2: Which debit ecosystem stakeholder group has been the primary driver of the coming Durbin Debit regulatory change?
a) Consumers, who were clamoring for relief from a “hidden tax” associated with their primary electronic deposit access method (0%)
b) Financial institutions, who were buried under the growing complexity of managing debit programs and struggling to make a positive business case in deposit access (0%)
c) Retailers, who were increasingly frustrated in their efforts to manage the growing costs of electronic payments acceptance and turned to regulatory pressure after having exhausted all other avenues of influence (negotiation, litigation, innovation) (75%)
d) Legislators, who in an increasingly challenging political environment have been looking for opportunities to expand the scale and scope of government oversight of financial services in an election year (25%)
Question 3: The major outcome of the Durbin Debit regulatory change will be which of the following?
a) Interchange rates for all deposit access products will fall, with debit programs on global branded networks seeing the greatest average decline in unit rates (44%)
b) Consumers will be provided with more choices for deposit access products, of increasing variety and value (6%)
c) Merchants will see sustainably lower operating costs for electronic payments acceptance, passing those savings along to consumers in the form of lower prices, stimulating demand (6%)
d) Financial institutions will find a new stimulus for product and service innovation, sustaining healthy businesses in deposit management and deposit access (44%)
Question 4: Which combination of constituency size and stakeholder role will see the greatest benefit in economics and growth from the coming regulatory reform in debit?
a) Size-Large, Type-Merchant: Lower costs and higher growth (69%)
b) Size-Small, Type-Merchant: Lower costs and higher growth (19%)
c) Size-Large, Type-Financial Institution: Greater revenue and higher growth (6%)
d) Size-Small, Type-Financial Institution: Greater revenue, higher growth (6%)
Question 5: The most likely and most relevant scenario outcome of the Durbin Debit regulation is which of the following?
a) Confused by complexity and cost, consumers will return to using paper forms of deposit access at retail (6%)
b) Retailers, particularly the largest ones, will grow money services businesses and private-label prepaid programs as they simultaneously 1) acquire underbanked consumers, and 2) directly control closed-loop acceptance costs (31%)
c) Financial institutions will recover and grow revenue streams through tighter consumer segmentation, enhanced fees, product and service bundles, and innovation (44%)
d) Prepaid program managers and processors will become the winners in the new debit marketplace, providing and servicing quick, easy, and accessible deposit access through “debit light” programs –with financial institutions relegated to the role of simple funds management (19%)
Debit 101 Lesson 1: Debit Landscape
Debit 101 Lesson 2: Debit Evolution
Debit 101 Lesson 3: Debit Implications
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