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A guide to the ATM and debit card industry - 2006 update

Author

Listed:
  • Fumiko Hayashi
  • Richard J. Sullivan
  • Stuart E. Weiner

Abstract

It has been three years since we published A Guide to the ATM and Debit Card Industry. Those three years represent a very dynamic time in the industry with a number of important developments. Some trends and patterns have persisted or accelerated, while others have peaked or reversed. Still others have emerged for the first time. The purpose of this 2006 Update is to document these trends and patterns by updating the data we presented in the original book and to discuss their implications for the current and future state of the industry. ; The most important development is that the two segments of the industry, ATM and debit, are in some sense going in opposite directions. The ATM industry has matured and is relatively stagnant, with major players jockeying for position, searching for and adopting different business strategies, and adjusting to the maturation of the industry. The debit card industry, in contrast, is expanding rapidly, with new players, new partnerships, new products, and new markets. The challenge in the debit card industry is not how to cope with a maturing industry but, rather, how to preserve and enhance position and not be left behind. ; In the first part of this Update, we highlight and discuss some of the most important changes in the ATM and debit card industry. For both the ATM and debit sides of the industry, we recap and analyze changes in activity levels, industry structure, and industry pricing. We then offer some thoughts on what might lie ahead, including a discussion of fraud and data security. In the second part of this Update, we present updated versions of the 23 charts and 11 tables from the original book, adding the three or four years of additional data that have since become available.

Suggested Citation

  • Fumiko Hayashi & Richard J. Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2, Jan 17.
  • Handle: RePEc:fip:fedkmo:2006agttaadci2
    as

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    File URL: http://www.kansascityfed.org/publicat/psr/BksJournArticles/ATMDebitUpdate.pdf
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    References listed on IDEAS

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    2. Timothy H. Hannan & Elizabeth K. Kiser & Robin A. Prager & James J. McAndrews, 2003. "To Surcharge or Not to Surcharge: An Empirical Investigation of ATM Pricing," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 990-1002, November.
    3. Williamson, Oliver, 2009. "The Theory of the Firm as Governance Structure: From Choice to Contract," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 111-134, December.
    4. Knittel Christopher R. & Stango Victor, 2008. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-42, January.
    5. Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 183-198, December.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jocelyn Donze & Isabelle Dubec, 2009. "PAYING FOR ATM USAGE: GOOD FOR CONSUMERS, BAD FOR BANKS? -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 583-612, September.
    2. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
    3. Gautam Gowrisankaran & John Krainer, 2004. "The welfare consequences of ATM surcharges: evidence from a structural entry model," Working Paper Series 2005-01, Federal Reserve Bank of San Francisco.
    4. Fumiko Hayashi & Bin Grace Li & Zhu Wang, 2017. "Innovation, Deregulation, and the Life Cycle of a Financial Service Industry," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 180-203, October.
    5. Hayashi Fumiko, 2006. "A Puzzle of Card Payment Pricing: Why Are Merchants Still Accepting Card Payments?," Review of Network Economics, De Gruyter, vol. 5(1), pages 1-31, March.
    6. Fumiko Hayashi & Stuart E. Weiner, 2005. "Competition and credit and debit card interchange fees: a cross-country analysis," Payments System Research Working Paper PSR WP 05-03, Federal Reserve Bank of Kansas City.
    7. Jonathan Zinman, 2004. "Why use debit instead of credit? Consumer choice in a trillion-dollar market," Staff Reports 191, Federal Reserve Bank of New York.
    8. Donze, Jocelyn & Dubec, Isabelle, 2009. "La tarification des retraits aux distributeurs automatiques bancaires, une revue de la littérature
      [ATM withdrawal pricing, a survey of the literature]
      ," MPRA Paper 16546, University Library of Munich, Germany.
    9. Stuart E. Weiner & Julian Wright, 2005. "Interchange fees in various countries : developments and determinants," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, issue May, pages 5-49.
    10. David S. Evans & Richard Schmalensee, 2005. "The economics of interchange fees and their regulation : an overview," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, issue May, pages 73-120.
    11. Fumiko Hayashi & Stuart E. Weiner, 2006. "Interchange fees in Australia, the UK, and the United States : matching theory and practice," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 75-112.
    12. Zhu Wang, 2010. "Regulating debit cards: the case of ad valorem fees," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 71-93.
    13. Sullivan, Richard J., 2013. "The impact of debit card regulation on checking account fees," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 59-93.
    14. Hayashi, Fumiko & Wang, Zhu, 2008. "Product innovation and network survival in the U.S. ATM and debit card network industry," Research Working Paper RWP 08-14, Federal Reserve Bank of Kansas City, revised 01 Jan 2011.
    15. Fumiko Hayashi, 2012. "The new debit card regulations: initial effects on networks and banks," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV.
    16. Zhu Wang & Fumiko Hayashi, 2011. "Product Innovation and Network Survival in the U.S. ATM and Debit Card Industry," 2011 Meeting Papers 725, Society for Economic Dynamics.
    17. Terri Bradford & William R. Keeton, 2012. "New person-to-person payment methods: have checks met their match?," Economic Review, Federal Reserve Bank of Kansas City, issue Q III.
    18. Ching, Andrew T. & Hayashi, Fumiko, 2010. "Payment card rewards programs and consumer payment choice," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1773-1787, August.
    19. Manchev, Peter, 2006. "Oligopoly Model of a Debit Card Network," MPRA Paper 2460, University Library of Munich, Germany, revised 26 Feb 2007.
    20. Terri Bradford & Matt Davies & Stuart E. Weiner, 2002. "Nonbanks in the payments system," Payments System Research Working Paper PSR WP 02-02, Federal Reserve Bank of Kansas City.
    21. Kay, Benjamin S. & Manuszak, Mark D. & Vojtech, Cindy M., 2014. "Bank Profitability and Debit Card Interchange Regulation: Bank Responses to the Durbin Amendment," Finance and Economics Discussion Series 2014-77, Board of Governors of the Federal Reserve System (U.S.).
    22. Hayashi Fumiko & Klee Elizabeth, 2003. "Technology Adoption and Consumer Payments: Evidence from Survey Data," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-16, June.
    23. Barbara Pacheco & Richard J. Sullivan, 2005. "Interchange fees in credit and debit card industries : what role for public authorities : conference summary," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, issue May, pages 1-1.
    24. Richard J. Sullivan, 2007. "Risk management and nonbank participation in the U.S. retail payments system," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-40.
    25. Bernardo Batiz-Lazo, 2009. "Emergence and evolution of ATM networks in the UK, 1967-2000," Business History, Taylor & Francis Journals, vol. 51(1), pages 1-27.

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