October 19, 2011
The impending $5 monthly charge for purchases made with Bank of America debit cards could help the FI to grow its business, stated CEO Brian Moynihan during a conference call this week, according to Bloomberg.
He believes the debit fee might prompt BoA customers, in an attempt to circumvent the charge, to try other bank services for the first time.
“The fees are to get people to bring more relationships,” Moynihan said. “So we’re comfortable that we’ll end up in a good dynamic there.”
When asked about the possibility of a mass customer exodus from the bank as a result of the new fee, Moynihan responded that the charge is meant for customers who use the bank’s ATMs and online banking program but “have their relationship elsewhere” for other financial services.
“That is tough for us to afford to provide, and we need to provide it all to our customers to be competitive,” he added.
Bank of America this week reported third-quarter net income of $6.23 billion on higher revenue, according to Bloomberg. Last year, BoA posted a loss of $7.3 billion due to a writedown at its card division.
Wells Fargo is aiming to recoup at least 50% of swipe fee revenue loss by growing debit card payments and implementing “product changes,” said Chief Financial Officer Timothy Sloan during the bank’s Q3 conference call. These changes may include new debit usage fees, according to Bloomberg. (More details)
