Banks Projecting Durbin Amendment Impact of $6 Billion

Bank of America and Wells Fargo say they've lost close to $800 million combined in swipe fees.

February 29, 2012

MINNEAPOLIS - Banks are on target to have a $6 billion shortfall as predicted because of the Dodd-Frank financial reforms, the Pioneer Press reports. Three months after banks decided not to charge customers for debit cards, financial firms are slowly revealing how losses from debit card transaction caps will be recovered.

With fourth-quarter earnings down, banks will be rolling out a variety of products, new service packages and other new fees to boost the bottom line. Wells Fargo and Bank of America registered close to $800 million in swipe fee losses, combined, during the fourth quarter, with regional banks also reporting steep declines.

"Fees have gone up across the board in the industry," said Dick Bove, a bank analyst with Rochdale Securities. "That's the only way they can get their money back."

The Durbin Amendment capped swipe fees at around 21 cents per transaction, around half of what had been the industry average. Several banks announced monthly debit card fees, which drew violent responses from consumers, triggering a reversal on the card fees by the banks.

Wells Fargo CEO John Stumpf said the company will up its cross-selling to increase profits. "Our customers pay for all the convenience we offer them through more products and services with us," he said.

Analysts predict banks will continue increasing fees in the years to come. "The consumer is getting stuck with the costs," said Greg McBride, a senior financial analyst with Bankrate.com.

See "Courting the Fed Over Swipe Fees" in the January 2012 issue of NACS Magazine for more information.

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