All Articles Tagged "debit card fees"
In a bold move, Brian Moynihan, the CEO of Bank of America, defended his bank’s right to impose a $5 fee on debit cards. In order to take much of the heat off himself and those in partnership with the company, he then said that customers and shareholders understood their recent moneymaking strategy because the bank has a “right to make a profit.”
During his press conference on Wednesday, Moynihan stopped short of blaming Obama who has come out against the greed that banks have been showing by stating that no bank has a right to a certain amount of profit.
“Well, you can stop [the fee] if you say to the banks, ‘you don’t have some inherent right just to, you know, get a certain amount of profit if your customers are being mistreated,’” Obama told ABC.
Of course, Moynihan is on the other side of the spectrum. During an interview with CNBC’s Larry Kudlow, he again stated that as a CEO, he has the duty to make sure all his shareholders are compensated.
Leading those to wonder, is he more preoccupied with fattening the wallets of his shareholders, instead of focusing his interest on the millions who deposit their monthly earnings into his banks around the world? It is not surprising that protests have sparked up around the country stemming form NYC”s Occupy Wall Street that began over two weeks ago.
In a vain attempt to justify the debit fee, Moynihan further explained that the bank was transparent in letting the customers know what they were doing and by giving them a chance to opt out before the new fee goes into effect in 2012.
Due to the changing landscape of Wall Street reforms, such as the Dodd-Frank Act, he was left with no other way to turn a profit as a public institution. At the same time, he tried to make it clear that he didn’t feel the bank was under attack. ”We have the best bank in the world, we do a great job for our customers,” he told Kudlow. Bank of America isn’t the only one imposing new fees on their bank customers; Citibank has also announced a fee accrual plan for checking accounts.
Cynthia Wright is an avid lover of all things geeky. When she isn’t freelancing, she can be found on her blog BGA Life and on Twitter at @cynisright.
(Daily Finance) — Banks received some long-awaited news last week: theFederal Reserve voted to cap feescharged to retailers on debit card transactions at roughly 24 cents per transaction, down from an average of 44 cents. Financial institutions had feared the Fed’s initial proposal of a 12 cent cap would go through, which would have been a buzz cut — a 73% revenue loss in what trade groups estimate amounts to a $20.5 billion a year income stream for banks. The Fed also delayed implementation of the new rule until October, yet another sign of the long, heavily lobbied debate.
(New York Times) — Fees paid by retailers to banks for debit card purchases, a $20 billion annual expense that has been the subject of a furious political battle over the last year, will be cut in half after the Federal Reserve voted Wednesday to cap the charges. The cap was mandated last year in the Dodd-Frank financial regulation law, but the Fed action was far less draconian than bankers had feared. The new cap of 21 to 24 cents a transaction, down from an average of 44 cents before the law passed, is roughly double the 12 cents tentatively proposed by the Fed last December. Consumers are unlikely to see any immediate change at the register because they do not pay the fees directly. But merchants have complained that as the cost of debit fees — a charge for processing payments — has risen in recent years, they have had to add it to the prices they charge.
(The New York Times and The Associated Press) — The Senate on Wednesday refused to delay new rules that would sharply cut fees that banks charge retailers to process debit-card transactions. The rules were a major part of the Dodd-Frank financial-regulation law passed last year. The Senate vote was one of the strongest challenges to the new law. While 54 senators voted for the delay, the measure failed to garner the 60 votes required for it to pass under Senate rules. Forty-five senators, including Washington Democrats Patty Murray and Maria Cantwell, voted against the delay. Still, the vote represented a remarkable, come-from-behind lobbying campaign by banks to recover from the anti-Wall Street drubbing they took during debate over financial regulation. The debit-card bill, sponsored by Sen. package Durbin, D-Ill., passed last year by a 2-to-1 ratio after little debate and no hearings.
(Wall Street Journal) — After this month’s crisis in Japan, the Red Cross raised tens of millions of dollars via credit-card donations. In response to the tragedy, Visa, MasterCard and American Express waived their credit-card fees, bringing the organization more than $1 million in additional funds.This goodwill gesture masks an ugly reality: Our growing love affair with credit cards, especially rewards cards, carries a real cost for our charities, which wind up footing the bill for our card fees. Retailers can adjust their prices to cover fee expenses. That isn’t an option for charities, religious groups and other nonprofits, which usually can’t pass along the fees because of rigid credit-card rules. Card transaction fees have long been embroiled in controversy. The Federal Reserve, prompted by last year’s Dodd-Frank financial-overhaul law, has proposed capping debit-card fees at 12 cents a transaction from an average of 44 cents now. Banks are up in arms over the proposal, saying that cutting the fees will lead to limits or new consumer charges on debit-card use.
(Wall Street Journal) — Some large U.S. banks are considering allowing debit cards to bounce just like checks. Normally, if a debit transaction is approved, payment is guaranteed, since debit cards don’t bounce. But now banks are faced with new rules that will restrict how much they can charge merchants for debit transactions, erasing billions of dollars in revenue. To make back some of that money, banks are weighing whether to divide debit-card services into components and charging for them separately-known as “unbundling.” For example, if merchants want a guarantee of payment, as approved debit transactions currently offer, that would cost extra.
Unbundling would deal a blow to retailers who won a significant victory with the enactment of debit-transaction fee limits. Merchants pay debit transaction fees. While details on how unbundling may be implemented are yet to be worked out, merchants would pay a fee for the guaranteed payment feature if it is enforced. It isn’t clear if consumers will pay a penalty fee—similar to that on a returned check—for a debit transaction that bounces. In December, the Federal Reserve proposed as part of an overhaul mandated by the Dodd-Frank law capping debt-transaction fees for large banks at 12 cents, down from an average of 44 cents. A Fed representative declined to comment.
(Wall Street Journal) — A set of new debit-card restrictions proposed by the Federal Reserve on Thursday was more aggressive than investors feared, potentially causing billions of dollars in lost revenue for U.S. banks and stiffening competition for credit-card providers. The new restrictions, most of which won’t be made final until April 21, aim to cap the amount of money that debit-card issuers can charge merchants for so-called swipe fees. Banks would face a seven-to-12-cent-per-transaction cap on the interchange fees under either of the two proposals unveiled Thursday. That represents as much as an 84% drop from the current average of 44 cents. Analysts had been expecting a drop of up to 60%.