WASHINGTON — A new report suggests that if the Federal Reserve proceeds with its proposed cap on debit card swipe fees, banks plan to eliminate a number of free products, cut jobs and make other reductions.
The report, from the Independent Community Bankers of America (ICBA), found many community-based financial institutions saying the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act will make it even harder to compete with larger banks.
Among the findings:
• 93% of community banks said they will be required to charge their customers for services that are currently offered for free because of the new law and the Federal Reserve rule.
• 72% said they will have to implement annual or monthly charges for use of a debit card.
• 61% said they will have to impose a minimum balance requirement.
• 50% said they will have to impose a charge each time a customer uses their debit card.
• 65% said they will have to raise their qualification standards, either by strengthening debit card qualification thresholds or closing higher-risk transaction accounts.
• Almost 20% indicated they will have to eliminate jobs or halt plans to open new bank branches.
• 72% of community banks said they will no longer be able to afford free checking accounts.
• Nearly 70% of community banks said they will have to charge for services that are now free, such as online or mobile banking.
• Nearly half of community banks claimed the rule will harm their customers because it will make it difficult for them to continue offering competitive rates on deposits and loans.
It isn't just the community banks announcing potential pricing changes, however. Bank of America, which is the biggest debit card issuer in the U.S., said it will begin charging retail customers checking-account fees unless they maintain minimum balances, make regular deposits, use credit cards or take advantage of online services.
