Debit card ruckus a tipping point for banks
Business Editor
Vilifying Bank of America has been a popular sport recently.
The bank's announcement that it will charge a $5 monthly fee for using a debit card at a merchant has outraged President Barack Obama, Vice President Joe Biden and countless workers struggling to make ends meet.
The outrage has been heard at banks and credit unions in York and neighboring counties. Tellers at ArrowPointe Federal Credit Union, First Citizens Bank, Family Trust Federal Credit Union, Provident Community Bank and South Carolina Bank & Trust say people are asking, "Do you charge for debit cards?" or "How can I move my account here?"
Even though the Bank of America fee doesn't start until 2012, some people already have moved their accounts, local bankers report.
The $5 fee has become a tipping point.
"People are saying with this $5 fee, enough is enough," said Lud Vaughn, executive vice president and chief operating officer for Provident Community Bank.
It can become a tipping point that separates the big banks from the local community banks and credit unions.
As Vaughn said, "We now have the advantage."
Lee Gardner, chief executive officer of Family Trust Federal Credit Union, told his board two years ago to be prepared for this day.
He saw the wave of banking regulation swelling in Washington and predicted the effects would be dramatic.
The change that triggered the biggest reaction is reducing the fee merchants pay the bank every time a customer uses a debit card.
The interchange fee - commonly called the swipe fee - was reduced from an average of 44 cents per transaction to 21 cents for banks with more than $10 billion in assets.
There are 37 billion debit card transactions annually, according to the Nilson Report. Cutting the swipe fee will result in a loss of $6.6 billion to the big banks, estimates Javelin Strategy and Research.
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