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New B of A Check-Image Fee May Further Paperless Push

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Bank of America Corp. is adding another fee that may lead some of its customers to shut off paper statements.

This month, the company began charging customers a $3 monthly fee if they elect to receive images of their cancelled checks along with their statements. Though B of A is not the first to charge for check images, its move furthers an approach the Charlotte, N.C., bank adopted last year when it required customers with a new type of account to stop receiving mailed statements as a condition of waiving their monthly fee.

Customers can avoid the new fee by choosing to access their check images online only or by shutting off paper statements entirely.

Don Vecchiarello, a spokesman for B of A, stressed that customers can still receive paper statements at no charge — so long as they reduce the bulk by opting out of printed check images.

"This change will only impact a very small percentage of our checking account customers," he said Friday. "The vast majority of our customers receive paper statements without images of their checks and they don't get charged a fee for that."

Vecchiarello said that the move to charge for check images is "in line with the rest of the industry."

Wells Fargo & Co., for example, charges $2 a month for check images and extended that fee to former Wachovia customers in July.

B of A's new fee is the latest effort by it to encourage online banking, and wisely so, experts said. "Banks are going to have to charge for things that cost them money," said Mary Beth Sullivan, a partner at the bank consulting firm Capital Performance Group. "I don't understand how that stuff can be free in the first place, especially when there's a free alternative available."

With new regulation that limits the fees banks can earn on overdraft services and debit interchange, there is an urgency among banks to find ways to not only recoup lost fee income, but also trim costs.

"Bank of America is like every financial institution," said Kurt Strawhecker, managing partner at Strawhecker Group, a payments industry consulting firm in Omaha, Neb. "With the impending Durbin amendment, where debit interchange fees will be reduced potentially dramatically, banks are looking at any way to replace that fee income that they would lose."

This summer B of A launched the eBanking account, in which customers can have an $8.95 monthly fee waived if they agree to receive their statements online and conduct most transactions online or at an automated teller machine.

The eBanking account was designed to replace B of A's CampusEdge student account, which had no monthly fees when opened online.

Other companies have launched accounts that do not offer a paper statement at all, and some offer perks to their paperless customers to reward them for opting out of mailed statements.

Vecchiarello said B of A began alerting its customers in September about the coming charge on check images. He also said that there are numerous ways customers have access to records of their checks.

For customers who opt for the free Check Safekeeping feature, the bank will keep copies or digital images of cancelled checks on hand for seven years. Customers can see copies of the checks online, or may request up to two free copies a month. After that, there is a $3 fee per copy.

Ron Shevlin, a senior analyst at Aite Group LLC, said "there have been a number of banks that have been tweaking their fee structure to try to disincentivize people to get paper statements."

Though banks are under pressure from consumers and regulators to justify their pricing, "to a certain extent, what Bank of America is doing is very defensible," Shevlin said. "This is not just some random fee they are dreaming up to hit a customer with. If you're a customer who writes a lot of checks a month, getting check images on paper generates certain costs. … If they have a cost involved in providing a service, I don't think there is anything wrong with having a fee to cover that cost."

This fee is not particularly harmful to consumers, he said, because for most of them it is easily avoided.

However, the potential downside is that the consumers who probably write the most checks may be the ones least likely to move online, Shevlin said, so the fee could hit a certain demographic of consumers more than others.

"The people who are most likely still writing a lot of checks, demographically tend to be older, as in the over-40 crowd," he said. "And that's not just because they don't use the debit card as much, but also simply because they are more likely to pay more bills and things like that. … They also tend to be the ones less likely giving up paper statements because they have been receiving them for so long and don't want to go online."

Overall, check use has been falling pretty dramatically over the past few years, so giving up the chance to receive check images in the mail to avoid a fee might not be a difficult trade-off for most consumers to make, experts said.

According to a Federal Reserve banks study released in December, electronic payments (those made with cards or by automated clearing house transfer) now make up the bulk of noncash payment transactions, while check payments make up less than one-quarter. Checks paid fell from 30.5 billion in 2006 to 24.4 billion in 2009, the study said, or at a compound annual decline of 7.2%.

The practice of mailing check images is "probably on its way to being obsolete," Strawhecker said.

In essence, B of A is giving its customers a "gentle" nudge, he said. The bank is saying, " 'Let's push more and more of our consumers in the direction we want them to go to be more efficient.' "

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