Bank of America backs off debit fee plan

Charlotte, N.C.-based Bank of America Corp. officials yesterday said the bank will not charge debit card users a monthly transaction fee – reversing its September decision to assess customers $5 per month for making debit purchases.

A two-paragraph statement said the nation’s second-largest financial institution is responding to customer feedback and a competitive marketplace.

"We have listened to our customers very closely during the last few weeks and recognize their concern with our proposed debit usage fee," said David Darnell, Bank of America’s co-chief operating officer, in the release. "Our customers' voices are most important to us.

"As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."

Bank of America had planned to implement the fee early next year, a move that Regions Bank, Wells Fargo and Chase Bank also had announced in attempts to cover revenue losses expected under the Dodd-Frank Act.

During the past week, those competitors each abandoned similar plans to enact debit card fees, leaving Bank of America standing alone in its decision, according to a New York Times report.

In rolling out the debit card fees, the banks cited a regulation effective Oct. 1 that cut by roughly half the amount banks with more than $10 billion in assets can charge merchants in debit card transactions, aka the interchange fee. The cap is now 21 cents, plus five basis points, per transaction, or .05 percent of the transaction value, according to the Federal Reserve Eighth District office in St. Louis. The average interchange fee collected by banks last year, according to a draft version of the new rules, was 44 cents per transaction.

Officials at Bank of America, which recorded $134 billion in 2010 revenue, have estimated the new rules will cost the bank $2 billion in annual revenues.

Bank of America (NYSE: BAC) shares were trading at $6.65 as of 11:09 a.m. Its 52-week range is $5.13 to $15.31.