Bank Of America $5 Debit Card Processing Fee
Well we in the credit card processing
world new it was coming before October 1st and Bank Of America has
fired the first shot. Bank of America is introducing a $5 debit card
free which will undoubtedly anger its customers.For those that do not already know, The Durbin Amendment which places a cap on what issuing banks can charge merchants to process debit cards. Credit Card Processing can be very expensive for merchants and this is why you see minimums in some stores in order for them to accept credit cards from customers. The legislation is good for small businesses and in turn will benefit consumers. But what about the banks? Are they the victims here?
Well if you follow credit card processing news headlines you would think they are being driven into bankruptcy. Their credit card processing revenue has been estimated at near $19billion per year and they are out to recover their potential losses any way they can. The announcement from Bank of America to charge a $5 a month debit card fee has been the most notable attempt so far. Other banks have already done so but BOA has the most depositors and is a giant in the industry.
The fee is not as bad as it sounds because the $5 fee will only be assessed as a monthly charge is someone uses their debit card during the month and it is not a per transaction fee. Transaction fees will be capped at 21 cents plus 5 basis points times the amount of the transaction and will be charged to the customer by the merchant. At the point of sale this is a much better deal for consumers than they currently face.
The way to avoid the fee with BOA is quite obvious. Don’t use your debit card. It sounds a bit harsh but the truth is that these new bank fees will change the way consumers behave in the market place. This fee will be imposed on top of any other checking account fees already in place. Free checking accounts have all but disappeared as a precursor to this new legislation and bank customers have to pay more attention to their accounts than ever before if they hope to avoid the pitfalls of a la cart banking but perhaps this is something good.
The incentive here is to become more reliant on cash and let the big monster mega banks know how you feel by avoiding their credit card processing fees as best you can. But for individuals who make lots of debit card transactions over the month, the $5 fee may prove to a blessing in disguise as they realize more savings at the point of sale. We will have to wait a few months to see how this all shakes out but one thing is for sure, things are going to be different as far as credit card processing is concerned.
