However, many other leading American banks such as J.P. Morgan and the Bank of America have already begun enforcing similar charges on their customers.See the Slide Show >>> 12 Shocking Personal Finance Statistics
Banks in the United States are on a trend to implement new or increased charges in the face of new regulations that take effect October 1. The new legislation, the Durbin Amendment, would see the amount that retailers pay for debit card usage (known as an interchange fee) reduce by almost 50 percent.
Currently, retailers pay banks (not Visa or MasterCard) an average of 44 cents for each transaction that goes through, using a formula which imposes a 1.14% fee above the transaction value. Once the new legislation kicks in, the Federal Reserve will impose a limit of 21 cents per transaction. The cap applies to banks with assets equivalent to $10 billion or more.
Debit cards are widely used as a convenient, fast and reliable mode of payment. There are 520 million debit cards in circulation in the United States today.
With the new caps, banks are looking for other ways to recoup the lost revenues, including a debit card fee and cutting back on rewards and loyalty programs associated with the cards.
In a separate move that would also discourage merchants from accepting debit card payments for small transactions, Visa and MasterCard are mulling over a proposed increase in merchant fees for small ticket purchases, according to a Wall Street Journal report.
At a conference in New York last week, group president of the Americas for Visa, Bill Sheedy said, "We need to make sure that we strike the right balance between driving value to the consumer and the merchant on small ticket purchases."
Such a move would provide a reduction in costs for most merchants accepting debit cards as a result of the new caps, with the exception of small-ticket merchants.