In the past few weeks, Chase nixed its debit rewards program and increased its ATM fees for non-customers to $5 in Illinois and $4 in parts of Texas. The bank cites the Durbin Amendment, which regulates debit interchange fees, as the reason for the changes. But according to some of our readers (see their comments at the bottom of that article), Chase doesn’t do a very good job of explaining to their cardholders what exactly this means.
“Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards. As a result of this law, we will be changing our debit rewards program,” the bank said in a letter to rewards checking customers.
Chase has also threatened to limit debit card charges to $50 or $100 per transaction effectively rendering debit cards useless at supermarkets, restaurants or gas pumps.
It seems that Chase has decided to act as though interchange regulation will be implemented as planned. However, legislative challenges to delay Durbin’s implementation have sprung up as we approach the April deadline for announcing regulation.
Senator John Tester, Democrat of Montana, introduced a bill about a week ago that would put off implementation for two years and require a yearlong study on interchange fees. The House version of the bill, introduced by Representative Shelley Moore Capito, Republican of West Virginia, would delay interchange fee regulation for one year.
The increased fees are part of the opposition to the Durbin Amendment. “The hastily passed Durbin amendment will have numerous unintended consequences for debit card users, including reduced access and increased fees,” said Senator Bob Corker, Republican of Tennessee, a member of the Senate Banking Committee and a co-sponsor of legislation to delay regulation.
Chase is far from alone in threatening – or implementing – benefit reductions. Ohio-based PNC Bank stopped reimbursing out-of-network ATM fees for free checking customers, and Bank of America proposed a $50-$100 debit card spending limit as well. Across the board, many banks have pared down or eliminated debit rewards or free checking, introducing fees for paper statements, help from tellers, or not making a minimum monthly balance.
Experts disagree over whether the outcry over interchange fee regulation has merit. As merchants and consumers face off against banks and credit unions in a heavy-hitting lobbying campaign, the implementation or delay of interchange regulation will either prove Chase and other early movers to be prescient in preparing for lost revenue, or frame them as overeager profiteers that alienate loyal rewards members.