Industry Blasts New BofA Debit Fee
The retail industry has expressed its dismay at the Bank of America’s decision to impose new fees on debit card users just as reforms passed by Congress are set to take effect.
“For years, Bank of America and its big bank peers have been imposing hidden fees on all consumers, whether they used cash, plastic or even food stamps,” noted Katherine Lugar, EVP for public affairs at the Arlington, Va.-based Retail Industry Leaders Association (RILA). “Swipe fee reform will rein in these fees, increase transparency and allow consumers to see the costs associated with the various payment options and make decisions accordingly.”
"Clearly, we are disappointed but not surprised to learn that financial institutions are implementing new customer fees on debit cards just as the Durbin Amendment and Federal Reserve Board actions go into effect,” said Peter J. Larkin, president and CEO of the Arlington-based National Grocers Association. “The Federal Reserve rules would have put billions of dollars back into the U.S. economy. Now the new fees announced by Bank of America and others will take that money away from consumers when they need it the most.”
According the Federal Reserve, Bank of America and other big banks reap a profit of 1,100 percent every time a debit card is swiped. These fees last year cost U.S. merchants nearly $20 billion, resulting in higher costs for retailers and ultimately consumers, RILA said. Even after the recently legislated reforms take effect Oct. 1, big banks like Bank of America will still collect more than 600 percent in profit on every transaction, the trade group observed.
“Crying poverty and adding fees, all while collecting a 600 percent profit on every transaction, is one heck of a public relations strategy,” said Lugar.
The Federal Reserve reported that there are 14,821 banks in the United States unaffected by debit swipe fee reform.
“Bank of America's new fee is great news for every other bank in America,” added Lugar. “If Bank of America wants to charge account holders to access their own money, every other bank, particularly credit unions and community banks, will welcome the flood of customers in search of a new bank.”