BofA to Charge Debit Card Fee, Retail Trade Groups Angered
Retail trade groups and consumer advocates expressed outrage when Bank of America Corp. recently announced that it would charge consumers a $5 monthly fee when debit cards are used.
Bank of America’s announcement was made right before the beginning of enforcement of swipe-fee reform, which started on Oct. 1. Wells Fargo & Co. and JP Morgan Chase will test $3 monthly debit-card fees in select areas. The hotly debated law capped swipe fees, the charges retailers must pay when consumers use debit cards. The fees were cut from 44 cents to 21 cents per transaction.
Debit-card reform was demanded by the Durbin Amendment, technically known as Regulation II (Debit Card Interchange Fees and Routing) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010.
For Mallory Duncan, senior vice president and general counsel of trade group National Retail Federation, the monthly fee will hurt consumers and retailers.
“Every time Congress takes a step to protect consumers, the banks use it as an excuse to raise fees,” Duncan said in a statement. “Just as merchants and consumers are about to get some relief, they’re doing it again.“
For Katherine Lugar of trade group Retail Industry Leaders Association, Bank of America’s announcement will benefit banks not charging a debit-card fee. Without it, merchants must pass along the fees to their consumers.
“Bank of America’s new fee is great news for every other bank in America. If Bank of America wants to charge account holders to access their own money, every other bank, particularly credit unions and community banks, will welcome the flood of customers in search of a new bank,” she said in a statement.
Ed Mierzwinski, a consumer advocate with Washington, D.C.–based U.S.PIRG, wrote in a blog that swipe-fee-reform benefits are endangered. He forecast prices would decline with swipe-fee reform, but merchants will be forced to pass along fees that are charged to their customers.
According to a statement from the American Bankers Association, banks have no choice but to charge a fee. “Make no mistake about it—these fees are the direct result of government price fixing that has fundamentally altered the economics of offering a debit card,” wrote Frank Keating, the chief executive of the ABA.—Andrew Asch
