Regulations could cost credit industry billions
Due to recent regulations passed by Congress and the Federal Reserve Board, banks and lenders are expected to lose billions of dollars in revenue this year. However, a new report by Boston Consulting Group shed insight on just how great this revenue loss is expected to be.
The report found that the regulations are likely to trim $25 billion annually from credit and debit issuers. As a result, these companies are expected to introduce new products and increase mobile banking offers.
From 2008 to 2010, global revenue for payment processors fell by a compound annual rate of 7 percent, according to the report. However, this was offset by the prediction that payment revenues will climb about 5 percent overall between 2010 and 2020.
In addition, the report found low-income consumers face the biggest risk, as banks and payment processors are expected to make big cuts to money-saving rewards programs and charge higher annual fees for customers that remain enrolled in the services.
Among the new products that could be forced on consumers are linked bank accounts and credit cards. New customers may also be forced to buy more expensive bundled packages.