24
25
CMSPI – IAC State of the Industry Report
CMSPI – IAC State of the Industry Report
3. The U.S. is the only country to see a significant increase in debit card costs Despite the Durbin amendment in 2011, which capped debit card interchange fees for large U.S. issuers, there was still a substantial increase in the cost of debit card acceptance for U.S. merchants between 1999 and 2018. This finding demonstrates the challenge U.S. merchants face with card acceptance costs, as regulated debit card fees still significantly exceed cash costs, while credit card fees remain unregulated and are significantly higher still. The way the card industry has responded to U.S. debit regulations has left opportunity for significant improvement in debit transaction costs, with a significant amount of debit cost incurred by (typically) unrouteable dual message debit transactions, as per Table 1.2 (see also Section 5). Should the industry fully enable competitive network routing on debit, CMSPI estimates these costs will drop.
ARE CENTRAL BANK DIGITAL CURRENCIES (CBDCS) THE FUTURE OF CASH? Nordic countries (Norway, Sweden, Finland, Denmark and Iceland) are often considered the world’s most cashless economies. 27 This perhaps means they are best placed to implement Central Bank Digital Currencies (CBDCs): digital currency issued by a country’s central bank. Here, we look at the state of cashless payments and CBDC development across these five countries: Norway • In Norway, 65% of F2F POS transactions were contactless. 28 • Norway’s central bank publicly announced that it was researching digital currency options to help support the switch to a cash-free society. 29 • Norge Bank has been investigating CBDC since 2016 and has concluded Phase 4 with the purpose to “strengthen the decision-making basis for whether CBDC should be introduced by conducting experimental testing of technical solutions and analyzing the purpose and consequences of the introduction of CBDC” 30 • Phase 4 also had recommendations for Phase 5 with the main delivery being “a decision basis for and recommendation as to whether Norges Bank should introduce CBDC and, if so, the recommended type of design and implementation” 31 • The government has proposed rules to meant to ensure that consumers can pay with cash for those are averse to using digital payments. 32
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
38%
3%
0%
-29%
-34%
-36%
Australia 2006 to 2013
Canada 2014 to 2018
Netherlands 2002 to 2009
Norway 2007 to 2013
Sweden 2002 to 2009
United States 1999 to 2018
Sweden • Sweden began the e-krona project in 2017 and have released their Phase 4 of the e-krona pilot that focused on testing and evaluating whether designing a secure, balanced-offline solution is possible. 33 • The mobile app Swish facilitated 200 billion Krona worth of transactions in 2020. 34
Graph 1.9 – Change in Debit Fees Over Time by Country 26
26 Kansas City Fed
27 Ingenico | The Nordic countries ready to say goodbye to cash 28 Ingenico | The Nordic countries ready to say goodbye to cash 29 Ingenico | The Nordic countries ready to say goodbye to cash 30 https://www.norges-bank.no/contentassets/fb85d452791d4d1a9f04aa4d3c18683d/norges-bank-papers-2--- phase-4---final-report.pdf?v=18122023133556 31 https://www.norges-bank.no/contentassets/fb85d452791d4d1a9f04aa4d3c18683d/norges-bank-papers-2--- phase-4---final-report.pdf?v=18122023133556 32 https://www.pymnts.com/cash/2024/norway-considers-rules-to-ensure-consumers-can-pay-with-cash/ 33 https://www.riksbank.se/en-gb/payments--cash/e-krona/e-krona-reports/e-krona-pilot-phase-4/ 34 https://ingenico.com/en/newsroom/blogs/nordic-countries-ready-say-goodbye-cash#:~:text=Sweden%2C%20 one%20of%20the%20most,10%20per%20cent%5B3%5D.
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