Bank of America’s plan to charge customers $5 a month to use a debit card has been blamed on new regulations that reduces its fee income.
Starting Saturday, big banks will collect less money — so-called swipe fees — from merchants to process debit card transactions. Retailers fought long and hard for a reduction in this fee, and now complain they are being made the scapecoat for Bank of America’s unpopular debit card fee.
“For years Bank of America and its big bank peers have been imposing hidden fees on all consumers, whether they used cash, plastic or even food stamps, said Katherine Lugar, executive vice president for public affairs with the Retail Industry Leaders Association. “Crying poverty and adding fees, all while collecting a 600 percent profit on every transaction is one heck of a public relations strategy.”
Adds Rachel Wolf, with the Merchants Payment Coalition:
“Mega-banks have been ripping off consumers and merchants for years, and will do anything they can to keep the practice going…The big banks who try to levy unfair fees will soon learn the lessons of competition as consumers choose banks and credit unions, larger and small, that treat them fairly. The mega-banks can scapegoat and scam all they want, but they are likely to drop the fees when they lose customers to competitors.”
According to the Federal Reserve, banks have been collecting an average of 44 cents per debit card transaction. That will drop to 21 cents plus 0.05 percent of the transaction amount in October. On a $38 debit card purchase, a merchant will pay about 24 cents.
To make up for this lost income, banks have been raising fees. Bank of America’s $5 monthly fee to use a debit card is the latest — although other banks are experimenting with similar fees.