Banks resisting debit card fee drawing interest

By ROB MORITZ

Arkansas News Bureau

LITTLE ROCK — Community banks across Arkansas are reporting an upswing in business since their decision to resist a move by bigger national banks to charge customers a monthly fee for using their debit cards. 

“We very definitely have noticed an increase,” said Bob Birch, regional president of Centennial Bank, which is headquarterd in Conway and has banks in Arkansas and Florida.

“Obviously we’ve been getting a lot of calls ... there are a lot of people unhappy about this deal,” said John Womack, chairman of Arvest Bank’s Central Arkansas region. Arvest also has banks in Kansas, Missouri and Oklahoma.

“It certainly is giving us some opportunity, but quite frankly I don’t think the big play will hit until those charges start, probably at the first of the year or when ever they kick them in,” Womack said. 

Bank of America, the nation’s largest bank based on deposits, will begin charging a $5 monthly fee to debit card users on Jan. 1. Over the summer, several regional banks announced such fees: Atlanta-based SunTrust announced a $5 fee and Regions Financial, based in Birmingham, Ala., a $4 fee. Additionally, several national banks, including Chase and Wells Fargo, are testing $3 monthly debit card fees in select markets. 

The fee has been a rallying cry in the recent Occupy Wall Street protest movement in which participants have denounced corporate greed. Bank of America was one of the more than 700 financial institutions that received about $205 billion in federal bailout money in 2008 and 2009. The bank received $45 billion and has since repaid the money to the federal government.

Bank officials have said they needed additional revenue to recoup a projected $2 billion annual loss expected because of new federal regulations “swipe fee” rules — that went into effect Oct. 1 reducing from 44 cents to 24 cents the cap on fees banks can charge merchants for processing debit card transactions.  

U.S. Sen. Richard Durbin, D-Ill., said the goal of the lower cap was to leave more money in the hands of retailers and merchants, rather than the banks.

Centennial Bank and Arvest recently issued news releases letting potential customers know they have no plans to impose a debit card fee. Centennial also launched an advertising campaign.

Officials at several community banks and credit unions in Arkansas  said last week that the phone calls began almost immediately after Bank of America’s announcement.

“We had people coming immediately,” Birch said. “In fact some had come in before because they had received notification from their bank about the change or read about it on an Internet blog. I think there was a lot of attention that was made and customers have responded and are responding.” 

Womack said Arvest Bank, the largest bank chartered in Arkansas and owned by the family of Walmart founder Sam Walton, has received a number of calls from potential customers

“We owe it to our customers” to resist the debit card fee, Womack said. “We feel very strongly that we want to support our customers just like we always have.”

Executives with TruService Community Federal Credit Union and Telco Credit Union, both in Little Rock, said their institutions also have heard from customers and potential customers.

“Absolutely, we have had the general public calling us and we’ve also had our members calling us because they are very concerned about this,” TruService President and CEO Linda Jeffery said.

Since Bank of America’s announcement, two U.S. House members, Reps. Jason Chaffetz, R-Utah, and Bill Owens, D-New York, have announced plans for legislation that would repeal the “swipe fee” regulation.

Arkansas Bank Commissioner Candace Frank said there are 96 Arkansas state chartered banks in the state, and 26 national banks.

She said banks do not have to notify her office if they decide to implement a monthly debit card fee.


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