Retailer trade groups are reacting to Bank of America’s recent announcement that it would charge consumers a $5 monthly fee for debit card use, calling it an unfair move for consumers.
The bank made its decision immediately before a new regulation that capped the amount large U.S. banks were allowed to charge retailers for debit card swipes came into effect. The law, known as the Durbin Amendment, is expected to cost Bank of American an estimated $2 billion in lost revenue.
“Every time Congress takes a step to protect consumers, the banks use it as an excuse to raise fees,” Mallory Duncan, the senior vice president and general counsel of the National Retail Federation, said, according to ApparelNews.net. “Just as merchants and consumers are about to get some relief, they’re doing it again. “
Katherine Lugar of the Retail Industry Leaders Association said that Bank of America’s move will benefit banks not charging a debit card fee and warned that merchants would be forced to pass the fees onto their consumers.
“Bank of America's new fee is great news for every other bank in America,” Lugar said, ApparelNews.net reports. “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.”
Bank of America may be the first major bank to implement debit card usage fees, however, a majority of larger banks are taking other actions that will cost their costumers more in order to recoup money that will be lost in interchange profits.
Traditionally, banks have used the money received from interchange fees in order to cover the high costs of fraud related charges.
Frank Keating, the president and CEO of the American Bankers Association, said that the Durbin Amendment gave banks no choice but to add new fees.
“Make no mistake about it—these fees are the direct result of government price fixing that has fundamentally altered the economics of offering a debit card,” Keating wrote in a statement, according to ApparelNews.net.