With banks on a quest to recoup tens of millions of dollars in lost revenue from a new federal law that takes effect Oct. 1, banking customers are already seeing fee increases and other changes in service.
As predicted by banking execs across the country, a new federal law that takes effect Oct. 1 already has consumers picking up the tab for banks expecting to lose out on substantial revenues.
According to The Baton Rouge Business Report, Oct. 1 marks the start of new rules regarding swipe card fees, or the amount of money banks charge merchants for each debit card transaction.
Before the Dodd-Frank financial bill passed Congress with the included "Durbin Amendment" on swipe fees, banks charged an average of 44 cents for each transaction. The new 21-cent cap on swipe card fees is less than half of what banks were able to charge, prompting new banking fees for customers in an effort to recoup the losses.
Regions Bank South Louisiana Area President Danny Montelaro tells The Business Report that his bank expects to lose out on $9.5 million after the law takes effect, which is why the bank on Oct. 1 will begin charging $4 a month for its customers to use a debit card.
The Birmingham, Ala., based bank is introducing a handful of other fees for customers, though some of the increases can be waived if certain deposit and minimum balance requirements are met.
And Regions is not alone in its quest to recoup revenue. According to the Business Report, other banks such as Chase have made bold changes to counter the new law, while IberiaBank and Capital One remain tight-lipped on their strategies:
Chase Bank has done away with its rewards program, spokesman Greg Hassell says, but it has not added any fees for debit card use. On Aug. 24, Chase's Total Checking account-its most basic account, for which most new customers sign up-began charging a $12 monthly fee if minimum direct deposit and account balance requirements are not met.
But other banks with a presence in the Capital Region are reluctant to discuss the possibility of new fees. IberiaBank spokeswoman Beth Ardoin says no changes have been made to fee structures, adding that officials "see no benefit in getting involved in the conversation" about their strategy to recoup lost revenue from the swipe fee.
Read more from The Baton Rouge Business Report here.
For more on the uncertainty banks are feeling from the financial overhaul, read our June report from ABiz, "Regulatory Recession."