Wells Fargo & Co. is testing a monthly fee with some customers to offset revenue losses it expects on debit card payments.

The San Francisco company recently sent notices to customers in Georgia, New Mexico, Nevada, Oregon and Washington to inform them of a $3 fee it will charge in any month they use their debit cards to make purchases. The fee will take effect Oct. 14 and would apply to all payments, whether authorized with a PIN or signature.

Wells warned customers earlier this year that it would make changes because of the Federal Reserve Board's decision to cap interchange rates at about 24 cents for the average transaction. Today the average is 44 cents.

With many consumers angry over the financial sector's role in the recession, Wells risks losing customers by introducing a new fee, says Philip Philliou, a payments consultant.

"We're at this fragile point in time right now," he says. "Now is probably the wrong time to introduce a fee that consumers are not used to paying."

Wells recognizes the potential for customer attrition from the pilot and potential rollout, according to a company spokeswoman. The bank will consider the pilot successful if it sees "minimal attrition," she says.

Wells decided on the $3 fee because it falls in line with what other banks are considering, the spokeswoman says.

JPMorgan Chase & Co. is testing a $3 fee with one checking account in a small market, according to a bank representative. Cards that work only at an ATM are free to use.

"We looked at some of our competitors to see which [fee amount] would help us recover lost revenue but possibly wouldn't be a pain point for the customers as well," the Wells spokeswoman says.

Wells is exempting some checking accounts from the fee, including accounts for military members and college students. The bank did not say how long its test will last.

A monthly fee for debit card use could change consumer behavior, Philliou says.

"If people start to lose faith in the value of having a debit card as a vehicle to access cash from their bank account, we might see a rise in check use, which is a major step backwards," he says. Consumers may also increase their use of prepaid cards, he says.

Some major debit-card issuers plan to offer reloadable prepaid cards in the near future, Philliou says. Establishing a prepaid card program could take six to 12 months, he says.

"Most issuers can't use the technology they have today," Philliou says. "They need to turn to somebody who has the prepaid card processing capabilities."

Community banks and credit unions may be able to attract the consumers that dislike paying fees to large issuers, he says.

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