Moving Past Customer Discontent Over Debit Card Fees

Amid recent announcements of debit fee retractions from major banks, Javelin's Beth Robertson discusses why Bank of America has taken the brunt of the public scorn for its fee announcements and how financial institutions can better offset losses while maintaining customer relations.

Over the past few days, major banks such as Wells Fargo, SunTrust, Regions Financial, JPMorgan Chase -- and most recently, Bank of America -- have announced the cancellation of debit fee programs that were in place or in the works. The banks have cited customer satisfaction as a major reason for retracting the charge.

Right before Bank of America's announcement came out I spoke with Beth Robertson, Director of Payments Research at Javelin Strategy and Research about the general public discontent surrounding debit card fees and why Bank of America in particular has taken the brunt of the public scorn.

Robertson said that the public has concentrated its animosity on Bank of America more than other banks that have rolled out debit fees partially due the way the bank made its fee announcement. "Bank of America was really the only bank that released such a blanket statement that the fee was going to go into place for most of their accounts, and they didn't really say who was going to be excluded," she explains. "The other banks said, 'We're going to put a debit fee in place but are only going to test it in certain regions or with certain accounts.' They acted as though it was more of a trial."

The other part, says Robertson, has to do with the bank's customer base. "Bank of America has a much larger debit card share than other banks have," she says, "so a debit fee would potentially affect so many more people."

Although Robertson acknowledges that banks are trying to offset losses resulting from new regulations, she also says that they're not necessarily going about it in the right way by charging debit fees. "Banks have been very much encouraging debit card use, and consumers switched to debit cards," she says. "Then suddenly, they're being told that debit is something they shouldn't use anymore if they don't want to incur a fee. It's such a dissonance for consumers in terms of what they've been doing for the last couple of years."

A better way of helping offset losses and maintaining a more positive customer experience, says Robertson, is looking for opportunities to add value and associating those items with fees so that customers feel they're getting something for their money instead of being hit with what seem like punitive charges. For example, she says, some banks are starting to offer an expedited payment service that allows a consumer to make a same-day bill payment. "Part of the reason you can charge a fee for something like that is because the consumer is avoiding a late fee by making the same-day bill payment," she says. "There's a value to the consumer and they don't necessarily feel like they're being penalized by paying a fee."

While Robertson and many in the financial industry agree that big banks have made a move in the right direction by deciding not to charge debit card fees, I can't help but wonder if customers will perceive these efforts as being too little, too late -- especially in Bank of America's case. I suppose we'll find out on Nov. 5, or Bank Transfer Day.