Major US banks and credit unions have formed
an alliance to push US consumers into lobbying against the
government’s proposed restrictions to interchange fees under the
Dodd Frank Act.

The Electronic Payments Coalition has launched
an aggressive advertising campaign, implying that banks will
eliminate debit cards if the Act is passed and consumers continue
to use their cards for purchases.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

A poster bearing the slogan: “Washington is
helping you clean out your wallet” reads: “A new regulation will
make your debit card more expensive, less convenient, or disappear
altogether.”

Another poster by the National Association of
Federal Credit Unions urges: “Do the right thing for America’s
consumers. Stop the interchange rule.”

Furthermore the Wall Street Journal
claims US banks are also pondering whether to “unbundle” their
debit-card services and charge extra fees for traditional
debit-card services.

Unbundling the charges would also impact
retailers as they would have to foot the bill to guarantee all
debit-card transactions while consumers may have to pay a
penalty-fee for a bounced debit transaction.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Chris McWilton, president of US markets at
MasterCard told the WSJ that with the Fed proposal the way
it is, unbundling is “definitely an option”.

Banks such as the Bank of America, Wells Fargo
and JP Morgan Chase are already beginning to revamp debit
programmes while other banks are exploring limits on the number of
monthly transactions and size of debit transactions allowed.

“We’ve helped develop the debit-payment
mechanism, and someone saying, ‘We don’t want to pay for that,’
forces us to rethink things,” Joe Price, head of consumer and small
business banking at Bank of America told the WSJ.

According to a survey by the Independent
Community Bankers of America (ICBA), banks will implement higher
debit card fees and implement restrictions for debit card use to
make up for the loss of the interchange fees they charge retailers
when consumers pay by card.

Banks claim they will no longer be able to
issue cards and warned they will abolish free accounts and other
charges for banking services to make up for the loss of swipe-fee
income.

“Implementing this deeply flawed proposed rule
will hurt our Main Street customers because merchant costs
associated with debit card acceptance will shift to consumers and
small businesses,” said Camden Fine, ICBA’s chairman and chief
executive.   

The ICBA survey of community banks found
that:

  • 93% of community banks say they will be
    required to charge their customers for services that are currently
    free;
  • 72 % say they will have to implement annual
    or monthly charges for use of a debit card;
  • 61% say they will have to impose a minimum
    balance requirement;
  • 50% say they will have to impose a charge
    each time a customer uses their debit card.