Weeks before the Durbin Amendment goes into effect, banks are already cutting their debit card reward programs in order to make up for the imminent loss of revenue.
JPMorgan Chase plans to drop its rewards program for its debit card linked to Continental Airlines on July 12, the New York Times reports, and SunTrust has curtailed certain reward programs as well.
According to the Los Angeles Times, Wells Fargo and many other banks are reducing or phasing out rewards programs that gave users cash back.
Bank of America and Citigroup have not cut any debit card reward programs as of yet but have added new fees to some checking accounts, the Los Angeles Times reports.
The Durbin Amendment passed as part of Congress’s financial regulation overhaul last year. It requires the Board of Governors of the Federal Reserve to set rates that large banks can charge merchants for processing debit card transactions. Banks have used the money collected from debit card swipe fees to fund the majority of rewards programs.
The Durbin Amendment will cost banks an estimated tens of billions of dollars annually. In a recent American Banker article, financial experts said cutting rewards programs will only provide banks an incremental boost to their bottom line.