Banks Formulate Plans to Cover Debit Card Losses - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Banks Formulate Plans to Cover Debit Card Losses

Banks Formulate Plans to Cover Debit Card Losses

Banks Formulate Plans to Cover Debit Card Losses
The content is accurate at the time of publication and is subject to change.

Wells Fargo and Regions Bank are hoping that reforms required by the Durbin Amendment are postponed. The new rules, scheduled to go into effect on July 21, put harsh limitations on the amount banks can charge merchants for debit card transactions.

Banks are hoping for a reprieve from the Senate to delay implementation until the end of 2012 or beyond. Meanwhile, the banks are devising ways to recoup the millions of dollars in revenue that they will lose from the implementation of the new law. Possible changes include raising minimum checking account balances, introducing debit card carrying fees and adding new surcharges to checking accounts. Wells Fargo estimates it will lose $325 million in quarterly revenue from the proposed changes. The smaller Regions Bank reported debit card income of $346 million in 2010.

A Boon for Merchants

The purpose of the Durbin Amendment is to reduce the fees that merchants pay for processing debit card transactions. Since banks will have a cap on the fees they can charge merchants of 12 cents per transaction rather than the current 1%, it is a move that will save merchants hundreds of millions of dollars. For small debit purchases, banks will not feel the burn. For large amounts, however, it will really put a dent in the revenues the banks generate.

To compensate for the losses, Wells Fargo is considering instituting a new processing fee for merchants that would not come under the auspices of the Durbin Amendment. This too would offset the loss of revenues to the banks, but would circumvent the fee-cutting law in the process.

Change in Business Model

Regions officials say they are reviewing their overall business model. It will require all areas of the bank and each department to conduct a thorough review of how they are doing business, the cost of doing business and the fees the bank is charging for its services. These assessments are what will ultimately lead to fee structure changes, such as minimum account balances, surcharges to accounts and fees for having and using a debit card. All of these fees will land on the shoulders of consumers.

For now, banks are lobbying to delay the law until more research and studies can be done that reveal the true effects on the banks, consumers and merchants.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Mastercard Set to Buy Ethoca
Mastercard Set to Buy Ethoca

Posted: March 20, 2019

Credit Card security is something that everyone is mindful of these days, and in keeping with this theme, Mastercard is set to buy Ethoca, a company that specializes in helping both retailers and card issuers detect and resolve digital… Continue reading

American Express Set to Buy Lounge Buddy
American Express Set to Buy Lounge Buddy

Posted: March 19, 2019

American Express is well known for their Centurion Lounge network, and now they are upping the ante with the purchase of LoungeBuddy, a digital platform designed to help people find and book time in airport lounges around the world. While… Continue reading

The New Luxury Card App is Launched
The New Luxury Card App is Launched

Posted: March 18, 2019

Luxury Card has rolled out their new app, giving cardholders access to a variety of features and benefits including, finding one of a kind experiences and chat in real time with Luxury Card Concierge Specialists. These specialists can help… Continue reading

Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn unlimited 1.5% cash back on every purchase, every day
For Average, Fair, Limited Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!