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Retailers Attack Banks on Fees

WASHINGTON — Retail groups last week criticized Bank of America and other banks that are implementing debit-card fees in the wake of financial reforms that sought to reduce the debit-card interchange fees assessed to merchants.

“Clearly, we are disappointed but not surprised to learn that financial institutions are implementing new customer fees on debit cards just as the Durbin Amendment and Federal Reserve Board actions go into effect,” said Peter J. Larkin, president and chief executive officer, National Grocers Association. “The Federal Reserve rules would have put billions of dollars back into the U.S. economy. Now, the new fees announced by Bank of America and others will take that money away from consumers when they need it the most.”

Bank of America said it would begin charging customers a monthly $5 fee for using their debit cards, and a handful of other banks also said they were implementing new debit-card fees.

“Banks dislike the fact that Congress has stepped in to correct this price-fixing duopoly,” said Food Marketing Institute, Arlington, Va., in a prepared statement, referring to the fact that the fees are controlled by MasterCard and Visa and cannot be negotiated by merchants.

The debit-card interchange fee reforms that were part of the Wall Street Reform and Consumer Protection Act took effect Oct. 1.

FMI said some of the benefits supermarkets could see include the ability to tell consumers about costs and fees; having an authority watching over debit-card fees; a more competitive market for debit card payments; and the ability to offer discounts for debit and cash.

Retailers will pay 21 to 24 cents per transaction, vs. a previous average of 44 cents.

Liz Garner, director of government relations for FMI, told SN that said she expects to see retailers test incentives to lure customers away from using credit cards, which can carry higher interchange fees.

“If we can incentivize [customers] to use a debit card instead of a credit card, it's a win for everyone,” she said.