The business passes the cost of the lost revenue to their customers.
Bank of America will begin charging debit card customers a $5 monthly fee for using their plastic to make purchases starting next year, according to spokeswoman Anne Pace. The move follows tests by other major banks, including Wells Fargo and J.P. Morgan Chase, to tack monthly fees onto debit cards.
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Banks are making the change because revenue from lucrative interchange fees paid by merchants -- so-called swipe fees -- is drying up. The Federal Reserve Board issued rules in June that essential
cut swipe fees in half, from an average of 44 cents to 24 cents per transaction. The new rule takes effect Oct. 1, and Bank of America has said it will lose $2 billion annually because of the change.
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"The economics of offering a debit card have changed with recent regulations, and we've decided to introduce a monthly fee for customers who use their debit cards for purchases," said Pace. "The price of a debit card was previously determined by the amount and type of transactions. We were able to pass some of these costs along to merchants, but because of regulatory changes, we are adjusting our pricing to reflect today’s economics."
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The new monthly fee will not apply to high-value banking customers who maintain large balances or other "premium" account holders. But it will impact many consumers who have shunned credit cards in favor of debit cards in an attempt to avoid accumulating expensive credit card debt.
Hmmmm....
"For every action, there is an equal and opposite, reaction"
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