Debit Cashback Fees: A Customer Service or a Merchant Revenue Generator?

With the number of bank branches receding, consumer access to cash through their debit cards at points of sale and ATMs becomes increasingly important. This consumer need is also a significant revenue driver at some retailers, particularly those in debit-heavy environments like grocery and dollar stores. 

This Javelin Strategy & Research impact note considers the acquisition of cash through debit cards from several perspectives: banks and retailers that consider debit card cash back an “on-us” service to consumers, entities that impose fees on this cash access, and the view from regulatory agencies scrutinizing such practices. Retailers should look at the success of the no-fee model at some large retailers and consider the merits of providing a consumer service with cashback access rather than using it as a revenue generator.