Today, Bank of America announced it would cancel its plan to charge a $5 monthly fee for debit card purchases.
Kendrick Sands, a company analyst for Euromonitor’s consumer finance industry offered the following comment:
“Bank of America was nowhere nearly as vocal as the other leading banks during the Durbin Amendment regulatory debate from July to September. Additionally, Bank of America wasn’t the first to propose implementing a debit card monthly fee to offset the losses, but since it was the last one to back down from implementing the fee, it got the most attention for it.”
Sands continued, “The Durbin Amendment limited debit interchange (the amount the merchant pays to banks on each transaction) and subsequently cut around US$20 billion from the balance sheet of the largest US banks.
JP Morgan first proposed the fee to offset the impact of the amendment. The big problem was that it was quite obvious the fees put in place by these banks would bring in much more revenue than what the banks were saying the fees were in place to cover. An analysis concluded banks stood to double the amount impacted by the regulation.
Other banks that were among the firsts to propose the fee quietly and quickly eliminated plans to implement it – too bad Bank of America, although one of the last to propose implementing such a fee, now faces the brunt of the public outcry because of its slow response. Maybe next time it’ll run the analysis rather than just follow what other banks are proposing, or at least keep one eye on an exit strategy so it’s not the last one facing the angry public when a plan backfires.”