Financial institutions came up with several new ways of recouping revenue lost from the Durbin debit interchange cap. Such methods included eliminating debit reward programs, raising minimum balance requirements to maintain free checking accounts, increasing ATM fees and even implementing usage fees. Usage fees, such as $5 per month or ten cents per use of your debit card, outraged consumers the most, with many threatening to switch to a credit union or at least discontinue debit card use. Now the major banks that proposed usage fees have decided to go a different direction. Chase and Wells Fargo had been trialing $3 usage fees in a couple pilot markets but have since decided to discontinue the monthly charge. SunTrust and Regions Banks also eliminated usage fees they were planning to implement on check cards. In early November Bank of America, who was originally going to adopt a $5 monthly fee beginning in 2012, was the last major bank to eliminate the usage fee.
Many consumers are relieved their banks decided to drop the monthly debit card fees, but there are several other ways banks will reclaim revenues once made from debit interchange, such as raising overdraft and ATM fees. In a study done by Pew Charitable Trusts it was found that the ten biggest banks disclose an average of 49 service fees, and each of these fees can be tweaked to compensate for reduced debit interchange revenues. The Pew report, Hidden Risks: The Case for Safe and Transparent Checking Accounts, calls for the newly formed Consumer Financial Protection Bureau to require banks to provide a one-page summary and disclosure of all their fees. Until such a requirement is created banks will likely complicate and increase various services fees because that is more transparent to the consumer than creating new charges. One thing is certain, financial institutions will find ways to compensate for the decline in revenue caused by debit interchange reform.
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Also see The Fraud Practice’s free white paper: Debit Interchange Reform 2011 – Market Impact Statement