In a move that shows the power of competition, Bank of America today announced its decision to drop the $5 monthly debit card fee that it had previously publicized. Because lower debit fees will mean lower prices, consumers walk away the big winner from debit card swipe fee reform legislation that was implemented last month.
The success of debit card swipe fee reforms and actually seeing the benefits of marketplace competition open the door for credit card swipe reform.
“Thanks to swipe fee reform, we’re seeing limits on hidden fees and competition among big banks and debit card networks,” said Lyle Beckwith, Senior Vice President of Government Relations at the National Association of Convenience Stores. “More competition and fewer hidden fees are huge wins for consumers. With similar reforms to credit card swipe fees, we will see these consumer benefits multiply.”
During the heat of the swipe fee debate in Congress, Bank of America, its fellow banks and banking associations painted a picture of the doomsday scenarios that would occur under swipe fee reform—including new fees from the big banks and the demise of small banks and credit unions.
But with Bank of America’s announcement, the country’s largest financial institutions have now erased plans to levy new fees. Meanwhile, small banks and credit unions that are exempt from swipe fee reforms are thriving from the new competition.