Swiping Debit Cards Might Cost More
COLUMBIA - Local bankers said Thursday consumer should be ready to lose some services like free checking accounts, thanks to new regulations for debit card use. Starting July 21, big banks--defined as those with more than $10 billion in assets--can no longer charge retailers as large a fee for each debit card transaction made by consumers.
Currently, each time you buy a sandwich, gas, or soda using your debit card, banks deduct a portion of the money you spend to guarantee payment and process the transaction. While the change won't impact consumers right away, Mary Wilkerson, senior vice president of marketing at Boone County National Bank, said that banks depend on those fees and eventually may pass the cost on to consumers.
Wilkerson said the debit card transaction fees are one way banks are able to provide free checking accounts. Debit card transactions bring in about $1 million each year for Boone County National Bank. If banks can no longer charge retail businesses the same fees, they will have to pass the cost onto consumers. Wilkerson said a free checking account costs the bank about $300 each year to manage and maintain and much of that money comes from debit card transaction fees charged to retailers.
Current debit card transaction fees on average are about 40 cents per transaction or about 1 percent of purchases. The new federal regulation will cap debit card transaction fees at 12 cents. The U.S. Senate voted on a bill yesterday to extend the date this change will take place to allow more study of the impact this transition could have, however the bill did not pass.