September, 29 2011
With new debit swipe fee caps set to go into effect this coming weekend, Bank of America, the nation’s largest bank in terms of assets, is planning to begin assessing a $5 monthly fee for customers paying via debit card, according to an internal memo distributed Thursday to the bank’s leaders.
The charge, which will be implemented early next year, will only apply to customers buying items with their debit card during the course of any given month. ATM transactions will not trigger the fee. (Related: Is BoA’s 30K Job Cut Due to Dodd-Frank?)
“Bank of America is trying to cushion revenue losses it expects to incur from new caps on the fees merchants pay when a customer uses a debit card at their stores,” explains the Wall Street Journal. “In June, the Federal Reserve Board finalized rules capping such fees at 24 cents per transaction, compared with a current average of 44 cents.”
WSJ reports the new debit interchange limits, which go into effect Oct. 1, could wipe out $2 billion in annual revenue for BoA.
“This new fee allows us to continue to offer the convenience of a debit card with the full range of added features customers have come to expect,” including fraud protection and monitoring, special savings programs and other services, the bank’s memo said.
Certain premium accounts will not be affected by the charge, the memo added.
“The economics of offering a debit card have changed with recent regulations,” a spokeswoman for Bank of America said in a statement Thursday.
“JP Morgan Chase is already charging a $3 fee in some places, such as Wisconsin,” reports the Los Angeles Times. “Regions Bank too has already begun charging a $4 monthly debit card fee, as well as Sun Trust Bank, which now charges a $5 monthly debit card fee.”
PYMNTS.com recently spoke with IBC Bank, a major regional bank in Texas and Oklahoma, regarding their decision to close 55 smaller branches in order to preserve certain free banking services. (Read interview) According to a survey by Dallas-based SWACHA, consumers are taking a firm stand against debit card fees: 93 percent of Texans would either change banks or use another payment method when faced with debit card fees. Click here for more of the survey’s findings.