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Contrary to the litany of industry arguments, the monthly service fees banks charge consumers are in fact not related to debit swipe fees, said the Merchants Payments Coalition (MPC) today after analyzing new data released by moneyrates.com and Bankrate.com.
Since the passage of the Durbin Amendment, the nation’s banking and credit card industries have contended that the newly imposed reduction in debit card swipe fees has forced them to increase the fees they charge consumers for services such as checking accounts.
However, a MPC examination of moneyrates.com and Bankrate.com data shows just the opposite.
“Swipe fees have tripled over the last decade, but that certainly hasn’t resulted in consumer checking fees getting cut by a similar amount,” said Tom Wenning, Executive Vice President and General Counsel, National Grocers Association.
In fact, Bankrate.com surveys show that just the opposite has occurred. Swipe fees and checking account fees have increased in tandem for six years in a row. From 2005 to 2011, checking fees jumped from $11 to $14 on average, while revenues from swipe fees grew from about $30 billion to $60 billion. (See chart below.)
Meanwhile, a moneyrates.com survey produced a surprising discovery.
“Our analysis found that big banks -- the only ones affected by the Durbin Amendment -- did not raise checking fees as much as the small sized banks that were exempted from debit reform,” said Wenning.
Small banks are competing fiercely with larger banks for their customers and have been successful as a result of offering personalized services, despite warnings by the banking industry that small credit unions and banks would suffer from debit reform.
Banks did all they could to throw consumers in front of the swipe fee reform train during the debit reform debate on Capitol Hill, said Wenning. Banks argued that if debit swipe fees were reformed, then they would have no choice but to charge consumers additional fees to make up for it. But they ignored the fact that banks already charged consumers as much as possible in fees and used every opportunity to raise those fees.
Both the Bankrate.com and moneyrates.com surveys make clear that consumer checking fees are not affected by what happens with swipe fees. Checking fees have their own competitive market dynamics, while swipe fees are centrally price-fixed by credit card companies.
The latest survey data from moneyrates.com (the second since debit swipe fee reform took effect) shows the following:
Banks not affected by swipe fee reform raised checking fees more.
Large bank checking fees are almost unchanged post-reform.
More large and medium size banks abolished monthly service fees after debit reform.
Consumer checking fees have their own market dynamics.
The Merchants Payments Coalition (MPC) - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees.
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