NEW YORK (MainStreet) — Wells Fargo (Stock Quote: WFC) will test a $3 monthly fee for debit card users in four states beginning Oct. 14. Consumers in Georgia, New Mexico, Nevada and Oregon will be charged the fee as part of a pilot program that may end up being rolled out for Wells Fargo customers nationwide.
A spokesperson for the bank told MainStreet that the fee is related to the Federal Reserve’s 21 cent-per-transaction cap on interchange or swipe fees charged to merchants each time a consumer using his or her debit card at their establishment.
“In WFC’s earnings announcement we talked about recovering 50% of the lost interchange revenue over time through product changes and volume growth,” the spokesperson said. “This is one of those ways we are looking at trying to recoup that lost revenue.”
Wells Fargo isn’t the first bank to try to make up for revenues lost to financial reforms with a monthly debit card fee. Chase (Stock Quote: JPM) is currently testing a $3.50 debit card fee in northern Wisconsin.
“I think [the fee] is quite reasonable, expected and a harbinger of things to come,” says, James Van Dyke, president of Javelin Strategy and Research, a market research company that studies financial institutions. “Banks will now have to come up with a way to recoup the lost revenue.”
A recent report put together by Javelin forecasts that revenue at affected financial institutions will decline an estimated total of $6.6 billion per year due to the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which enacted the swipe fee limits.
A Wells Fargo spokesperson said that it was too early to speculate on future changes to its policies, but Van Dyke says that consumers generally should expect to see new fees introduced by their financial institutions as the financial reforms go into effect.
“We’re going to see a lot of experimentation,” he said. “Every set of regulations is different. Issuers can’t know what will work.”
Van Dyke also said that some new fees may actually be of value to consumers. For instance, a small fee to expedite a payment or the cashing of a check could be an adequate replacement for paying a high overdraft fee when an account gets overdrawn.