From November 1st to 4th, executives of several major banks gathered at the Bellagio in Las Vegas for the 19th annual 2011 ATM, Debit & Prepaid Forum, and an industry conference to discuss the major issues facing the banking business. 80 industry leaders, including keynote speakers from Bank of America and American Express, brainstormed possible ways to recoup as much as $8 billion in lost revenue due to new caps on what banks can charge retailers for processing debit card transactions, Reuters reports today.
The new regulations went into effect on October 1 and have significantly lowered interchange fees, which are fees paid between banks for the acceptance of card based transactions, usually paid by merchants to a customer’s bank. The fee has now been reduced to 21 cents, which is about half of the previous industry average.
Bank executives admit there is no easy solution for reclaiming such huge losses; so many ideas have been bouncing around. One option discussed at the conference is shift focus onto payment methods that do not have their processing fees capped like prepaid cards and credit cards.
Another option is to charge higher account fees or require customers to maintain higher minimum balances to avoid monthly maintenance fees.
BB&T senior vice president and manager of the bank’s retail payments, Scott Qualls said that banks should look at how customers use a bank’s services when charging fees and that interchange fees can only account for a portion of the fees to be generated from a cardholders’ accounts.
Another idea that was planned for 2012 by Bank of America and tested in recent months by other major banks, including JPMorgan Chase and Wells Fargo, but was ultimately scrapped was to charge customers a monthly debit card fee ranging in price from $3-$5 depending on the bank. However widespread public outrage and even criticism from President Obama led banks to recant. This week, SunTrust bank even reimbursed customers who were charged the debit fee.
But banks’ plans to make gains in fees by emphasising credit card use may also be thwarted by Balance Transfer Day. Scheduled for December 11, 2011, Balance Transfer Day calls on credit card holders to unanimously transfer their outstanding debts from high interest rate credit cards to cards with zero interest rates and zero balance transfer fee, on that day.
“Essentially, banks are using our own tax money to make even more money off of us. So why don’t we beat the banks at their own game and demand the same 0% interest rate that they receive from the federal government?,” Balance Transfer Day organisers wrote on their Facebook page. “Banks will get a message that we all want lower rates”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.