Headline amended to reflect details of the program and update with executive interview.
NEW YORK (
may completely end its debit card rewards program depending on the outcome of regulatory changes regarding debit card interchange fees, said Edward Kadletz, the head of Wells Fargo's debit card business.
"We need to see what the regulations are on April 21st, and once we see that we will know what to do," Kadletz said. "We will see what we will do with the program. The interchange program would lower rates to 12 cents. You just can't afford to pay out a rewards program at that price."
The bank announced Friday that that the debit card rewards program and combined credit card and debit rewards program would end for new customers on March 27 at former
branches, and April 15 at Wells Fargo branches. Existing Wells Fargo customers will remain unaffected for the time being, according to an email from a company spokesperson.
The rewards program offered 1 point for $4 spent in net debit card purchases when customers had their credit card and debit cards enrolled in the program, according to the bank's website.
The announcement of the program's cancelation is one of many expected in the industry.
have also announced they would be ending their debit rewards program due to the passage of the Durbin Amendment in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The new regulation restricts the amount banks can charge merchants for debit card transactions. The cap is supposed to be set at 12 cents per debit transaction, which is 70 percent lower than it is currently. Banks are currently assessing how the debit interchange fee program will impact revenue.
Wells Fargo's former CFO Howard Atkins said that the interchange program would cost Wells Fargo $ 250 million after tax of income per quarter.
Bank of America
has said the law may cost them $1.3 billion in losses. Industry-wide debit interchange fees generated $16 billion in revenue in 2009, according to
A final rule on The Durbin Amendment is expected from the Federal Reserve on April 21 and the rule will go into effect in July. Banks have been urging Congress to delay the deadline. Wells Fargo's Kadletz is hoping the deadline will be pushed back.
"We think of the delay of the study is a good idea. This is one of the most popular payment methods we have and implement this and create a lot of different consequences. This is a windfall for the merchants and we just haven't seen that happen in other countries," said Kadletz. "Our concern on government price controls on interchange. These price controls have been set at a level at so far below costs."
--Written by Maria Woehr in New York.
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