NEW YORK (MainStreet) — Another big bank is cutting back on the rewards it offers to its debit cardholders.
Wells Fargo (Stock Quote: WFC) announced Friday that it will no longer enroll new customers in its debit rewards program, which allows cardholders to earn one point for every $4 in purchases.
But “debit card customers already enrolled in the rewards program will continue to earn rewards at this time,” Lisa Westermann, Wells Fargo’s assistant vice president of public relations told MainStreet.
According to Westermann, the change is “due to pending regulatory changes that are expected to result in a significant reduction in fees retailers pay issuers for debit card transactions.”
As we previously reported, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve has the right to limit debit card interchange fees established by card networks and paid by merchants to card issuers for each transaction. The new standards, once established, will apply to issuers with assets of $10 billion or more.
Back in December, The Federal Reserve proposed a 12-cent-per-transaction cap on swipe fees that credit card issuers impose on merchants on Thursday, a stipulation estimated to cost big banks about $20 billion in revenue.
Earlier this month, Westermann told MainStreet that Wells Fargo would hold off on changing its debit cards rewards program, since the Fed rules were yet to be finalized. Final decisions on the regulations are not expected until this summer.
The announcement makes Wells Fargo the third bank to make changes to its debit cards rewards program since the Fed issued its initial swipe fee proposal.
JPMorgan-Chase (Stock Quote: JPM) announced in November that it would limit its debit card rewards program to existing customers, only to end the program completely last week.
PNC Financial (Stock Quote: PNC) also said in March it will no longer give customers reward points for debit card purchases on free checking accounts after Sept. 12, 2011.
Wells Fargo’s changes affect its standalone debit rewards program as well as the program that allows customers to combine their debit card and credit card into a single program. Westermann said that Wachovia’s debit rewards program will close out on March 27, and Wells Fargo’s will close out on April 15.
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