Mobile-banking access is one of several services financial institutions might start charging for if the Federal Reserve Board’s proposed new debit card interchange rules take affect, one analyst believes.
“If that’s what it takes to make the checking bundle profitable, there’s a possibility,” Bill McCracken, Synergistics chief executive, tells PaymentsSource.
At issue is the Fed’s proposal to cap debit card interchange at 12 cents per transaction. One industry study predicts issuers stand to lose some $11.8 billion in revenue as a result (
“At those rates, it’s hardly profitable for a bank to have a debit card product,” McCracken says.
Since the Fed’s proposal became public, observers have speculated on how banks might compensate for lost debit-interchange revenue. The debit card might start to resemble a credit card in terms of fees, McCracken says.
“[Fees] could be as creative as a credit card annual fee, where it’ll cost $60 per year to have a debit card,” he says.
A fee for going over a monthly debit card transaction limit is another possibility, McCracken says. “If you have more than 20 debit card transactions per month, we’re going to charge you $9.95,” he speculates.
At least one bank already is getting creative in terms of per-transaction debit card fees. Last week, United BankShares Inc. announced it raised its PIN-debit fee for purchases to 50 cents per transaction from 25 cents, according to a report in the Charleston (S.C.) Daily Mail. United debit cardholders do not pay fees for signature-debit transactions.
“The fee for the personal identification number-based debit card transactions has remained unchanged for years and was recently increased to bring the fee more in line with the market,” Steven Wilson, United Bankshares’ executive vice president, told the Daily Mail.
Unknown is whether the issuer will apply the same fee to signature-debit transactions if the 12-cent cap remains in the Fed’s final rules; the cap applies to both types of debit card payments. United Bankshares did respond to a request for comment.
McCracken, whose company specializes in consumer research, believes consumers ultimately will suffer from unintended consequences related to financial legislation. “I think consumers at the end of the day are going to be hurt by these rules,” he says.
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