Tags: JPMorgans Dimon US Debit Fee Caps May Hurt Poorest Customers

JPMorgan's Dimon: US Debit Fee Caps May Hurt Poorest Customers

Friday, 14 January 2011 11:53 AM EST

Federal limits on debit card processing fees will force banks to charge customers more for services, making accounts too expensive for as many as 5 percent of customers, JPMorgan Chase & Co.'s chief executive said Friday.

The rules, proposed as part of the Dodd-Frank financial reform law, would cap the fees that merchants pay banks for processing debit card transactions at 12 cents each. That is almost 75 percent less than the average 44 cents per transaction that banks get now.

U.S. banks could lose about $13 billion of their annual industry debit processing revenues because of the rules, which the Federal Reserve proposed last month.

Bank executives have said they will raise their fees to compensate for losing debit card processing revenues. They predict that some people will be unable to afford the fees, forcing them out of the banking system into the realm of check cashers and payday lenders.

The term that the banks use for this is "unbanked."

The rules "will have the adverse consequences of making a portion of current bank clients unbanked. You will not be able to profitably serve them," Dimon told analysts during the bank's fourth-quarter earnings conference call Friday.

About 5 percent of today's banking customers "may be pushed out of the banking system," he said.

Dimon's comments were one of the first times a major U.S. bank executive has quantified the potential effect on consumers from the Fed's proposed rules.

© 2024 Thomson/Reuters. All rights reserved.


FinanceNews
Federal limits on debit card processing fees will force banks to charge customers more for services, making accounts too expensive for as many as 5 percent of customers, JPMorgan Chase Co.'s chief executive said Friday. The rules, proposed as part of the Dodd-Frank...
JPMorgans Dimon US Debit Fee Caps May Hurt Poorest Customers
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2011-53-14
Friday, 14 January 2011 11:53 AM
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