Wells Fargo to test $3 debit card fee

The Pak Banker - - COMPANIES/BOSS -

Wells Fargo plans to test a $3 monthly fee for its debit cards start­ing this fall. The San Fran­cisco-based bank said the fee will be ap­plied to check­ing ac­counts opened in five states start­ing in Oc­to­ber. The fee would be in ad­di­tion to monthly ser­vice fees rang­ing from $5 to $30 that Wells Fargo al­ready charges. Although it's un­usual, Wells Fargo isn't the first ma­jor bank to test whether cus­tomers will be will­ing to pay to use their debit cards.

Chase last year also be­gan test­ing a $3 monthly debit card fee in north­ern Wis­con­sin. Other ma­jor banks have also re­vamped their lineup of check­ing ac­counts in the past year or so, in many cases by hik­ing monthly fees or adding con­di­tions cus­tomers must meet to qual­ify for fee waivers.

At Wells Fargo, for ex­am­ple, monthly ser­vice fees can be waived if cus­tomers set up di­rect de­posit or main­tain a cer­tain min­i­mum bal­ances. The in­dus­try's ex­per­i­men­ta­tion with fees is partly a re­sponse to a new reg­u­la­tion that will sharply re­duce the rev­enue that banks col­lect on check­ing ac­counts.

Start­ing this fall, a new cap will limit how much banks can col­lect from mer- chants when­ever a cus­tomer swipes a debit card. It's not clear ex­actly how much banks will lose. In 2009 banks col­lected an es­ti­mated $19.7 bil­lion in such fees from mer­chants, ac­cord­ing to the Nil­son Re­port, which tracks the pay­ments in­dus­try.

Wells Fargo has said it plans to re­cover about half the rev­enue it loses from the new reg­u­la­tion, ei­ther through prod­uct changes or vol­ume growth. Ear­lier this year Wells Fargo an­nounced that it was end­ing its debit re­wards pro­gram. Chase has also ended its debit re­wards pro­gram and PNC Bank will no longer give cus­tomers with free check­ing ac­counts re­wards for debit card pur­chases. For now, Wells Fargo's $3 debit card fee test will be lim­ited to ac­counts opened in Ge­or­gia, Ne­vada, New Mexico, Ore­gon and Washington. A spokes­woman for the bank, Lisa Wester­mann, did not say when the bank would de­cide whether to roll out the fee in other ar­eas.

The test comes at a time when con­sumers are in­creas­ingly re­ly­ing on debit cards. A poll last month found that about two-thirds of con­sumers use debit cards more fre­quently than credit cards.

When asked how they would re­act if they were charged a $3 monthly fee for their debit card, 61 per­cent said they'd find another way to pay. If the fee was $5 a month, two-thirds said they'd do the same. If the fee was $7, the fig­ure rose to 81 per­cent.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.