Consumers Looking at Higher Fees for Debit Cards

Discussion
Jun 28, 2011
George Anderson

A RetailWire poll in April asked if Congress should wait to implement the so-called Durbin amendment restricting what banks could charge for card transactions. Seventy-four percent of respondents said “no” while only 11 percent thought it was a wise approach.

At the time, banks and supporters argued that while implementing the law might reduce interchange fees, it would ultimately drive up many other costs for consumers. They also suggested that the savings promised by retailers would never materialize. According to the National Retail Federation, the average American household in 2008 paid $427 in credit/debit card interchange fees.

Now, according to the Los Angeles Times, banks are looking to cut out rewards programs or add fees to recoup the dollars they expect to lose with the new law. A banking industry consultant, Michael Moebs, told the paper that the change will mean consumers pay an average of $36 a year in direct fees from banks.

Discussion Questions: Is there any danger of a backlash against retailers as bank fees rise? Should retailers make an effort to be transparent in communicating the savings that consumers will enjoy as a result of Congressional action?

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13 Comments on "Consumers Looking at Higher Fees for Debit Cards"


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Max Goldberg
Guest
9 years 10 months ago

Retailers should be transparent if fees are assessed for using debit cards. Consumers do not hold banks in high esteem and expect them to be greedy. There is little to gain from retailers protecting bankers.

Paula Rosenblum
Guest
9 years 10 months ago

The banks are an easier target these days. Movies like “Casino Jack,” “Too Big to Fail” and “An Inside Job” have eliminated ANY vestige of good will the banks had with the community at large. That doesn’t even include their continued tight purse strings with individuals and small companies.

The more likely response will be “We bailed these #$#$’s out and now they’re raising fees AGAIN?” If you recall, the Obama administration arranged for a law that made it harder for them to arbitrarily just raise credit card fees to usurious levels.

People feel like they can “game” retailers with coupons, sales, price transparency, markdown chicken, etc. I think there’s a general sense of helplessness about banks. Sooner or later that will become a discussion for another board!

Gene Detroyer
Guest
9 years 10 months ago

Retailers should be extraordinarily transparent. Consumers know who the “bad guys” are and this would reinforce where the costs are coming from.

Of course, if they are extraordinarily transparent, then the question will always come up…”Can I pay in cash and save the fees?” But, that is a whole other issue.

Roger Saunders
Guest
9 years 10 months ago
Retailers have found the credit/debit card transactions to be a boost to sales–ticket and frequency of visits–over the past 25 years. Banks supported the play, shifting transactions from credit to debit, providing retailers with faster access to cash, at a lower fee. The Durbin bill, which the retail industry sought, is about to break up this symbiotic relationship. If retailers genuinely feel that they are providing a cost savings to consumers, then they should step up to the plate, and let consumers know how they are the beneficiary. That has about as much likelihood of happening as seeing snow on the Fourth of July in the lower 48. Yet, as banks adjust fees, or decline to provide credit instruments to the less affluent populace, there will be a hue and cry from retailers who see a shrinking spend, and from politicians of the Durbin ilk who maintain a lack of equity. The banks will see the backlash. Yet, they should stick to their principles, and issue the credit to credit-worthy consumers. We’re seeing that take… Read more »
Tony Orlando
Guest
9 years 10 months ago

Let the banks eat crow, as consumers are fed up with them. Supermarkets have become banks for some folks, as they use our money to keep the fees lower, so the repercussions will not fall on us.

Liz Crawford
Guest
9 years 10 months ago
I am not sure that retailers will feel the heat. Rather I think that if rewards programs are curtailed or dropped, the consumer savings rate among lower income people may slow. Many banks have a savings program like B of A’s “Keep the Change.” Here’s an excerpt from their website on how the program works: “After your enrollment, we’ll round up all your Bank of America debit card purchases to the nearest dollar amount, and transfer the difference from your checking account to your savings account. We’ll match 100% of your Keep the Change savings for the first 3 months. The maximum total match is $250.” That’s a pretty good deal. And especially appealing to consumers who have trouble saving because of their income bracket. There are similar programs involving saving for college. I think it would be a shame to slow this kind of savings–which begs the question about a redistribution of funds. Are the fees which are distributed across households being somewhat re-distributed to lower income households (those participating in the programs)? Is… Read more »
Matthew Keylock
Guest
Matthew Keylock
9 years 10 months ago

I think transparency is a good place to start. Banks need to innovate to overcome the regulation changes that are pressurizing their balance sheets.

It still feels to me as though there are some upside-down incentives in the overall mix. Encouraging credit use by making it more expensive to use your own real money (debit) feels like one example that may not be good for the overall long-term health of the nation.

Ed Rosenbaum
Guest
9 years 10 months ago

I am not a big fan of banks (or, for that matter, Congress at this time) and the fees they can and will charge. Seems reminiscent of airline fees for everything but going to the bathroom. I imagine that will come soon.

Banks are not much different. No matter what, there will be a fee attached. Soon we might be charged for going to the ATM vs. the teller, or vice versa, or both. It makes me feel we — the ultimate consumers and users of the services, limited as they are — become like the rats following the Pied Piper. Somehow we have to stand united and say, as in the movie, “I am mad as hell and won’t put up with this anymore.”

Kai Clarke
Guest
9 years 10 months ago

Of course retailers should communicate these fees to their customers. The banks have no recourse here, except to do the right thing and better manage their fees. Just because banks were usurious in their fees before does not give them the right to continue with these exorbitant costs now.

Steve Montgomery
Guest
9 years 10 months ago

In many case c-store/gas stations are posting separate pricing for cash versus credit with differentials ranging from $.05 to $.15 per gallon depending on the price of fuel and their credit card costs. The issue for some is that they are limited (by local zoning laws) to the amount of signage they can have visible to the road and must post the higher of the two prices which means the consumers may not see the cash savings until they are at the dispenser.

Jerry Gelsomino
Guest
9 years 10 months ago

The backlash will be lost customers. Who needs more fees besides the banks?

Bill Hanifin
Guest
9 years 10 months ago

The conduct of the banks in preparing for the implementation of Card Act 2009 was damaging to their brand image in the public eye. Slashing credit lines, cancelling accounts, raising rates, and adding fees are never vote-getters with consumers.

Bank behavior in the public eye during the Durbin negotiations has been similarly negative from the consumer perspective.

Banks will take the full blame for higher fees. Retailers should just take some blame for pushing a legislative measure that they must know will not serve consumers well in the long run.

The furor over this legislation has evidenced the self interest of the opposing parties and will generally harden consumer attitudes towards all big business.

Odonna Mathews
Guest
Odonna Mathews
9 years 10 months ago

I don’t think consumers will blame retailers for higher bank fees. Higher fees will not be forgotten by consumers. After all, who really likes their bank anyway?

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