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Regions sets debit card fees in bid to offset revenue losses

In a soon-to-arrive consequence of the Dodd Frank Wall Street Reform and Consumer Protection Act, Regions Bank in mid-October will begin charging customers in Mississippi and elsewhere a $4 monthly fee for debit card use.

The financial services sector has been predicting for the past year that Dodd Frank’s mandated cut in swipe card fees paid to a debit card’s bank would force banks to offset the revenue losses. Other banks in the Magnolia State are holding off assessing the fees, though Wells Fargo is test marketing a $3 monthly debit card charge in Georgia and four other states in the West and Northwest.

The fee will be charged only one time per month regardless of the number of cards tied to the account or the number of point-of-sale transactions. Selecting either “debit” or “credit” on a transaction will trigger the fees.

Both Wells Fargo and Regions will still provide free use of the cards at ATM machines but will collect the fees on use of the cards for paying for products or services. “We and other banks are adjusting how we cover the costs of providing debit cards,” Regions said in a statement.

The Birmingham-based multi-state bank will offer upgraded checking accounts that allow the customer to avoid “point of sale” charges for debit card use.

Like Regions, Wells Fargo will begin collecting the charges Oct. 14. In addition to Georgia, Wells Fargo is initiating the charges in its New Mexico, Nevada, Oregon and Washington markets.

Other banks in Mississippi are holding back — for now, a survey of several of them found.

“At this point we’re not moving in that direction,” said Trustmark’s Barry Planch, senior VP for product management.

He said the Jackson-based regional bank wants to encourage — not discourage — use of debit cards. “We feel like use of the debit card is good for our customer and good for the bank,” Planch said, though he emphasized that revenue pressure could force Trustmark and other banks to begin charging fees.

“Ultimately, all may do it,” he said.

BancorpSouth and Renasant Bank, both based in Tupelo, and Starkville’s Cadence Bank are also continuing to offer fee-free debit card use. Community Bank, based in Ridgeland, is also holding back on the fee collections.

Cadence spokeswoman Donna Rupp said the bank has no plans for a change, while BancorpSouth spokesman Chuck McIntosh said the bank has not yet settled on a strategy for offsetting the revenue loss. “BancorpSouth has not made any decisions yet at this time on debit card pricing,” McIntosh said.

Community Bank’s spokesman Tony Sims said the bank intends to stay the course on free cards. “For us, it has become a service our customers have come to rely on,” he said.

The interchange fee cuts set by the Federal Reserve board go into effect Oct. 1. Banks that had been averaging 40 cents to 44 cents a transaction will receive a base fee of 21 cents that can rise to around 24 cents based on the bank’s level of compliance with fraud prevention standards.

Asset values of Community Bank ($2.25 billion), Cadence ($1.53 billion), and Trustmark ($9.6 billion) put the Mississippi-based banks below the $10 billion threshold for the interchange fee caps.

But it is widely expected — even by the chairman of the Federal Reserve — that smaller banks will be forced to cut their interchange fees as well, said David C. John, Heritage Foundation senior research fellow, in an analysis.

Smaller card issuers received the exemption because spreading their costs across a much lower volume of transactions forces them to charge higher fees than larger issuers if they are to survive. But smaller issuers have no leverage and will be squeezed into accepting the lower rate, John wrote, and noted several banking regulators, including Federal Reserve Chairman Ben Bernanke,agree.

“Both they and representatives of smaller issuers argue that merchants could refuse to accept debit cards issued by smaller banks and credit unions because the merchants would have to pay higher fees.”

That could lead to even more concentration in the banking industry, he wrote.

For Regions, the new fee assessments come as debit card use among its customers is higher than ever. Regions “experienced a record quarter in interchange and ATM income” in 2011’s fist quarter after receiving $368 million in debit card fees in 2010, an 18 percent increase from the previous year, said president & CEO Grayson Hall in a 1Q earnings presentation.

An 8 percent increase in card use and a 13 percent increase in spending levels drove the 18 percent rise, Hall said.

The Federal Reserve Board initially proposed a 12 cents cap on the fees and has the option of going to that level two years from now.


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  1. I received a letter in the mail from Regions regarding this just the other day. My account is now successfully closed. I’m sure I could qualify for one of the other plans, but I now have no interest in doing business with Regions. Worst thing that ever happened was Regions purchasing my old bank. Their online customer support is terrible and doesn’t seem to be able to understand simple questions in English. Although, the people at the local branch were good — too bad.

  2. I agree with you Tony I have been a Long time customer of Regions bank. Thru years of name changes. Customer for about 20 years or more, I am now looking to change banks! How dare they continue to rape customers of OUR money. Yet they continue to build fancier and more plush banks, tells me where my money is being used. They talk us into using debt cards then decide to add charges, well I am not going along with this and will not stay at any bank charging these fees. So long REGIONS and thanks for your loyalty.(NOT) Yes to bad, any banks not charging fees out will be the biggest banks around. Maybe putting the greedy ones out of business, yeesss to bad.

  3. I too received this letter. I am very dissapointed. I really liked Regions bank. We have already opened a new checking account at PNC bank and as soon as our direct deposits are switched over, our account at Regions will be closed. Very Dissapointed in you Regions..Very Dissapointed

  4. I am closing mine tomorrow as well. Just allowing the final transactions and my last paycheck to come through. This is absolutely ridiculous. I will be switching to a credit union that does not assess this fee. And to think, I have been with them for so many years. I am just disgusted.

  5. I closed my account shortly after Regions took over Amsouth, they dont care anything about customers just in making money from whomever they can, invested with them also on a CD For 12 months NOT once did they write to me to say anything, would NEVER do Business with Regions ever again not even to change a $5 bill into 5 ones, they will charge for that soon.

  6. I to have found nothing but disappointments recently with Regions Bank…. They have really let me down by changing the way the customer is treated…
    Its time to remind them that the customer is always right..Regions bank cannot exist and stay in business if the customers go somewhere else….
    The customers should communictae by leaving the bank…..

  7. I’m all for lighting torches and burning bridges, but I’m going to hold off to see who all enforces these fees later on. I would shut my Regions account down tomorrow and switch to another bank, but who is to say that bank isn’t going to start charging those same fees. I don’t know what they are trying to achieve? I can some what see them doing this for debit transactions, but when you run your card as a credit the business owner pays the fee.

  8. We and other banks are adjusting how we cover the costs of providing debit cards,” Regions said in a statement.

    They are just now deciding how to recoup the cost of providing debit cards? Maybe just tell the truth and say” WE ARE DECIDING HOW WE CAN RECOUP THE BILLIONS OF DOLLARS WE ARE LOOSING DUE TO THE NEW FEDERAL REGULATIONS. SO WE DECIDED TO STICK IT TO OUR CUSTOMERS!!!!” The truth sounds better than a big fat LIE!! They were never worried about it before!! They were sticking it to the merchant..

  9. @Trish: The banks weren’t worried about it before because the merchants were paying it. That is, they were until Wal-Mart and other large merchants lobbied Congress for intervention. The law of unforeseen consequences strikes again: The Durbin Amendment moved the fee from merchants–who benefit most from debit cards–to consumers.

    Except it wasn’t unforeseen–before the Dodd-Frank bill was passed, it was mentioned more than once during debate that this would be the exact outcome of this particular amendment.

    You should be railing at Congress and those companies that lobbied for this bit of unnecessary meddling in the market.

  10. Richard Thomas

    mgd: You are correct. HOW DARE the government interfere in a private transaction between banks and merchants. This is the same Frank and Dodd who have caused so much misery in our economy already. Nonetheless, the fee is too much and I will be moving my account from Regions within the week.

  11. I also will be closing my account with Regions. Not only are they charging the $4 fee for debit card use, they are charging a $10 a month fee for the “free” checking account that i opened years ago bc i do not have my pay checks direct deposited. That is absurd!!! Not only did they not inform me of this, when i called customer service and told them they cant just take $14 out of someones account bc their company does not offer direct deposit they had no concern suggestions to offer me other than to change banks. What were they thinking when they decided to insert these fees ramdomly? That no one would mind? They r going down the drain bc no one is going to keep their account open there anymore!!

  12. I will be changing from Regions as soon as I can get all of my drafts changed and my direct deposits. This is crazy that they would charge you for using your own money. I have been doing business with this bank through all the changes since 1986. They do not care about the customer anymore. They will be the next bank to close if they contine to do business as they are now.

  13. I have been a Regions investor and customer since the 1970’s. The decline of this bank is so sad and it has management brought in after its merger with AmSouth is to blame. Not only does the current management not care for its investors, by diverting dividends to pay multi millions to the likes of Dowd Ritter, and even more for him to leave corporately it does not care for its customers. Its individual employees are treasures in my experience, and they too will suffer. Ultimately, the problem is the board which apparently has not been able to address adequately its own aggressive management team.

  14. Kathryn Morse

    I have been wondering how much the top executives at Regions get paid . . . that may be a source of funds for the company to make up losses.

    Really! We work hard for our money and its robbery when top executives take home million dollar salaries at the expense of the lower and middle-classes.

    I am glad that they “took back” the fee. But I hope this does not mean delays for pay raises for the tellers and local bank employees that wait on us. Many of them that I talk to are struggling to make ends meet.

    I feel the pain of young bank employees with stories like, “I have an MBA and this is best job I can get and I know I need to be saving for retirement, but I have to choose between saving and moving back in with Mom and Dad. I need to find a second job.” Of course, this is story of MANY in our country now. : (

  15. Hmmmm, Phil, the Amazing Skeptic? Cool!

  16. Michael Schnoor

    I have been a Reigons customer for many years now and was extreamly satisfied until the merger with Amsouth. As a former Amsouth customer i now remember why i changed banks. Its sad that a corporation will take over a good thing and mess it up…

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