The debit card fee dominoes are falling, leaving Bank of America Corp. increasingly alone in its controversial effort to make customers pay for using their debit cards.
SunTrust Banks Inc. on Oct. 31 became one of the last remaining holdouts to cave, telling customers it would discontinue its $5 monthly fee and refund those customers who already had started paying to use their debit cards. The Atlanta-based bank followed larger rivals Wells Fargo & Co. and JPMorgan Chase & Co., which both cancelled tests of similar fees last week (
That leaves BofA increasingly isolated in maintaining its widely criticized fees. The bank is likely to give customers more loopholes to avoid paying those fees, which some observers see as the first step in an inevitable backtrack of the entire plan.
“They’re going to retreat. … Big companies don’t like to be out there naked,” says payments consultant David True.
A BofA spokesperson declined to comment.
The bank announced its plans to start charging customers $5 per month in September, a few days before new federal rules took effect and essentially halved issuers’ debit card interchange revenue (
Big banks already had been raising the prices on their basic checking accounts in response to the regulations slashing the once-lucrative “swipe” fees they receive from merchants every time customers buy things with their debit cards.
BofA representatives were careful to point out the link at the time, saying, “The economics of offering a debit card have changed with recent regulations.”
But that effort to make a political point in consumers’ wallets did not go over well. Politicians as high up as President Obama blasted BofA for its decision, which came amid widespread, ongoing protests against Wall Street and the banking industry. Obama later backed down on his criticism (
BofA’s efforts to blame the government for its new fee “made them sound petulant about the regulatory changes, and I’m not sure petulance is ever becoming on a major corporation,” says Campbell Edlund, president of EMI Strategic Marketing Inc. “I don’t think consumers have either a deep understanding or an appetite to understand either of the regulations, which are complex, or their implications.”
Regions Financial Corp., the other remaining big bank holdout, has been charging customers $4 per month to use their debit cards. A bank spokeswoman declined to comment on Monday.
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