NEW YORK (AP) ? Wells Fargo customers had to see it coming. The San Francisco-based bank says it will end its debit rewards program for existing customers in October. The bank had already ended enrollment in the program to new customers earlier this year.
Behind the News
Debit rewards are fast becoming a rarity. Chase also ended its debit rewards program this year and PNC Bank said it will no longer give customers with free checking accounts rewards for debit card purchases.
Banks say the pullback is a result of a new regulation that will limit how much they can collect from merchants whenever customers swipe their debit cards. This revenue stream generated an estimated $19.7 billion for banks in 2009, according to the Nilson Report, which tracks the payments industry.
The rule goes into effect in October and will cap the amount banks can collect from retailers at 21 cents for each debit card transaction, plus an additional 0.05 percent of the purchase price to cover the cost of fraud protection. Banks currently charge an average of 44 cents per transaction.
More Bad News
The elimination of debit rewards programs isn’t the only unwelcome change for checking accounts. Banks have also been raising fees or introducing new fees over the past year. Others have raised minimum balance or monthly spending requirements.
Last year, the availability of free checking accounts with no strings attached shrank for the first time since 2003. The amount fell to 65 percent of checking accounts, down from 76 percent in 2009, according to Bankrate.com.
And just last week, Wells Fargo said it plans to test a $3 monthly fee for its debit cards in five states starting this fall. The fee will be on top of the monthly service fees ranging from $5 to $30 the bank already charges for checking accounts. Chase is conducting a similar test in northern Wisconsin.