BOSTON—A new study shows that the Durbin Amendment hasn’t decimated debit rewards, as had been expected.
Mercator Advisory Group’s report, “Top 50 U.S. Retail Banks and Credit Unions’ Debit Rewards and Loyalty Programs: 2014 Annual Review,” indicates that consumers find far too much value in debit rewards for retail banks and credit unions to eliminate them. Instead, financial institutions are targeting the right rewards to the right consumer and trending toward real-time redemption of discounts and other rewards and toward implementation of mobile apps, mobile couponing, and location-based rewards.
The study reveals that five years after the passage of the Durbin Amendment debit rewards programs have rebounded such that 50%–60% of financial institutions in the U.S. offer debit rewards in one form or another.
“It is clear that both retail banks that are regulated by the Durbin Amendment and those that are exempt continue to provide debit rewards,” Mercator said. “Smaller financial institutions have in fact increased their offering of debit rewards. Larger financial institutions are standing their ground, for the most part, with a few more or less offering debit rewards.”
Research finds that consumers prefer cash rewards first and foremost on debit cards, and then traditional points or miles second. Issuers’ strong preference for merchant-funded rewards programs over traditional issuer-funded points programs is also evident, Mercator said.