CHARLOTTE, N.C. -- "In response to customer feedback and the changing competitive marketplace," Bank of America no longer intends to implement a debit-card usage fee, it announced yesterday.
In late September, the financial institution announced the $5-per-month fee to be implemented in early 2012 as a way for it to recoup the revenue lost to the interchange of swipe-fee cap passed in July 2010 and put in place October 1 by the Durbin Amendment to the Dodd-Frank Wall Street Reform & Consumer Protection Act.
The retreat by Bank of America follows similar moves by other big banks such as SunTrust, Wells Fargo, Chase and Regions Bank, which have all backed off plans for debit-card fees. Other big banks made hay by touting that they would not charge such a fee, and many consumers have indicated that they would pull up stakes and move to smaller community banks or credit unions to avoid new fees.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," said David Darnell, co-chief operating officer of Charlotte, N.C.-based Bank of America. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
It is " move that shows the power of competition," said the Merchants Payment Coalition (MPC) in a statement reacting to Bank of America's announcement.
"Because lower debit fees will mean lower prices, consumers walk away the big winner from debit-card swipe-fee reform legislation that was implemented last month. The success of debit card swipe fee reforms and actually seeing the benefits of marketplace competition open the door for credit card swipe reform," it added.
"Thanks to swipe fee reform, we're seeing limits on hidden fees and competition among big banks and debit-card networks," said Lyle Beckwith, senior vice president of government relations at the National Association of Convenience Stores (NACS), a member of MPC. "More competition and fewer hidden fees are huge wins for consumers. With similar reforms to credit-card swipe fees, we will see these consumer benefits multiply."
And Katherine Lugar, executive vice president of public affairs for the Retail Industry Leaders Association (RILA), said in a statement, "[The] news is proof-positive that consumers remain swipe-fee reform's biggest winners. Bank of America and its big bank peers are no longer free to fleece merchants and consumers at will. This outcome is just what consumers deserve, what reform advocates predicted and what we will fight to extend to the credit-card market."
And senior vice president and general counsel Mallory Duncan of the National Retail Federation (NRF), said in a statement, "This decision proves that a free and open marketplace based on transparency and competition works. When merchants were saddled with sky-high credit- and debit-card swipe fees years ago, there was little they could do because the fees were hidden and there was no true competition. But when this fee was announced in the open by one bank and other banks offered the same service without a fee, consumers were able to do what retailers have always wanted--to vote with their feet. This is why card companies and banks have tried so hard to hide their fees--because when excessive fees are exposed to the light of day, they go away."
He added, "Thanks to bipartisan efforts in Congress, we've begun to see transparency and competition for debit-card fees. We need to achieve the same for credit-card fees."
Click here for previous CSP Daily News coverage of swipe fees.
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