Comments on: Why debit fees should be low A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: bryanX Tue, 15 Mar 2011 19:28:26 +0000 no one wants FREE. That’s an overstatement.

People want non-obfuscated agreements: simplicity, transparency, appropriate fees.

But if lower fees are going to put bankers in the poor house, maybe we should all bite the bullet and accept with the current situation.

I wouldn’t want to send no bankers straight to the soup line.

Now excuse me while I make my deposit to Chase bank – i got a chance to get a DOUBLE DEPOSIT. I could WIN up to 5,000 dollars. I’m so excited <<<< sarcasm

By: y2kurtus Mon, 14 Mar 2011 13:47:49 +0000 “20 years down the road branches will be a lot different. They will not be transactional (you will be able to do your transactions on your phone or via the ATM), they will be consultative. Think no teller lines and instead advisers sitting behind desks discussing personal financial management with clients.”

Wow I’m flattered… we’ve converted 4 of our twenty branches to exactly that format. We’ll have the rest changed over by 2015. I guess my community savings bank is ahead of the curve!

By: Carl15 Sat, 12 Mar 2011 17:41:23 +0000 @ TFF

Once banks figure out product pricing in response to the regulation, the next “big thing” will be channel rationalization. Some banks are already playing with variations of “online only” accounts that entail fees for interacting with humans at the branch or on the phone. I don’t think you will see widespread branch fees (or the elimination of branches altogether) any time soon. But 20 years down the road branches will be a lot different. They will not be transactional (you will be able to do your transactions on your phone or via the ATM), they will be consultative. Think no teller lines and instead advisers sitting behind desks discussing personal financial management with clients.

With over 7,000 banks and 7,000 credit unions in the US, it is the most competitive market for banking in the world. There is literally nowhere in the US where consumer choice of bank is limited to one or two institutions.

That’s why claims that fees are unnecessary and banks can make money without them are so curious. If it were true, Citi could give everybody a free checking account with all the bells and whistles at no cost to the consumer and destroy the other large national banks. It is unrealistic to claim that “wallowing in interchange” is a form of pure greed. If this were true, somebody out there would stop “wallowing” and start dominating market share.

By: TFF Sat, 12 Mar 2011 17:09:50 +0000 Very well put, Carl!

Maybe I’m a little different. All I ask for is:
* Transparency. I want to know how much I’m paying for a service.

* Appropriate matching of services and costs. If some forms of access are more expensive, then charge more for those — and I will modify my behavior to utilize the less-expensive forms of access.

* A competitive environment. Think we already have that.

By: Carl15 Sat, 12 Mar 2011 17:03:40 +0000 Felix should stop writing about banks in general. It is funny that people (including some commenters) who appear to be so clueless about the economics of checking accounts write so self-assuredly on the subject.

The debit card is not a product. It is a service. An access point to the checking account. You cannot look at debit cards and checks in isolation. They are both access points to the same product, the checking account, as are ACH transfers.

Checking accounts are not costly because of check volume. Checking accounts are costly because they are highly transactional and because they are the tools that individuals use for personal financial management needs. This means that the bulk of channel (branches, call center, online and mobile banking, ATMs) interactions are tied to checking accounts. Operating channels is the most costly thing that banks do.

This is the second shoe to drop for free checking. Overdraft fee regulation was the first. You can make a very strong case that overdraft fees were/are highly regressive. The case for debit interchange is much more dubious. Citing debit rewards, as if they are on par with credit card rewards, is a joke. Debit rewards are not, by any means, ubiquitous. The rewards are quite limited and often dependent on having direct deposit and/or web bill pay at an institution.

If the 12-cent interchange rule goes through, checking accounts will be extremely unprofitable, to the point that they will be impossible to justify, even as loss leaders. Wishing away the reality or claiming that it is somehow the fault of evil bankers is foolish. The imposition of checking fees will be absolutely necessary.

Felix (based on this entry and the blog entry a few months ago about Chase) seems to feel that people are somehow entitled to have checking accounts with multiple expensive access points, a robust channels network and complete fraud protection and not have to pay for any of it. It is the typical sense of middle-class American entitlement, plan and simple.

By: bryanX Sat, 12 Mar 2011 03:29:20 +0000 are doing transactions at a 25 cent flat fee, and that’s why I’m an early adopter for both my web and brick n’ mortar stores.

With wider adoption of “smart” phones and the easy tools to code alternative payment pathways, the VISA/Mastercard monopoly could come tumbling down.

The rates they charge merchants are horrible. Rewards cards? That means taking an extra piece from the Merchant and handing it over to the customer.

Don’t even get me started on the AMEX big sucking hole of unnecessary fees.

Yeah. I’m hoping, and (any other non-evil tech startup grounded in fairness and transparency) shake retail banking to it’s core.

By: seanh21 Fri, 11 Mar 2011 17:17:42 +0000 Felix, thanks for cutting through the FUD. The consumer angle that the banks are pushing right now is ridiculous and is designed to manipulate us ( re-pawns-in-the-durbin-debate/).

This is a fight between retailers and banks and shouldn’t be clouded by a trumped-up fear of losing our free checking. It is good public policy because it increases transparency and regulates the behavior of an abusive monopoly.

By: deaner66 Fri, 11 Mar 2011 02:37:05 +0000 Yeah, Because if JP Morgan says it’s true, well then, it just has to be…

By: NerdWallet Fri, 11 Mar 2011 01:30:24 +0000 While this is all true, debit interchange isn’t really the problem. While American fees are higher than in Europe, where the fees are regulated, they are lower than much of the world. America is actually middle-of-the-road on debit interchange fees, when compared to the world at large (according to data on the Visa website).

In credit card interchange, however, we are by far the highest. And even more alarming, the gap between those fees paid by large merchants (Wal-mart) and small merchants (your local bodega) is larger than any other country.

By: MyLord Thu, 10 Mar 2011 23:20:04 +0000 Perhaps the rich will have lower rewards on debit cards, but the poor will be hit with higher fees on cash and checks or go unbanked, often with even higher fees. I don’t see how they will benefit. The prudent will always prosper off the imprudent, that is the reason for interest.