Faced with a weak economy and a $2 billion shortfall from the tightening of restrictions that came with the passage of the Dodd-Frank act, big banks have searched for ways to create additional revenue streams without pissing off customers. Last month, Bank of America announced there would be a monthly $5 fee for using a debit card, and in the process conveniently forgot the part about not pissing off customers. The proposal seemed like yet another way to nickel and dime customers to death.
The fee was met with the usual uproar and dissatisfaction, but unlike past fees implemented by big banks, for once the consumers have won a round. Bank of America announced Tuesday they are pulling a Netflix and reversing course by dropping the proposed $5 debit card-transaction fee after “negative customer feedback on the plan,” the WSJ reports.
Consumers: 1, Bank of America Fees:
0 still quite a bit, actually.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, co-CEO, said. “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.”
The banks generally move ahead regardless of how anti-consumer the fees are. Then, once those fees are in place, the banks generally nudge them ever slightly upwards until one day it’s like, “Holy cow, I have to pay $5 just to withdraw money from an ATM?!?”
So what gives? One factor in the decision seems to be how other banks left BofA twisting in the wind. In this case, the consumer uproar was loud enough that Wells Fargo and J.P. MorganChase figured they could capitalize by announcing they would not be charging a fee. Soon, other regional banks announced plans to drop its own debit card fees, and when the dust settled, BofA was the only major bank with plans to institute a debit card-transaction fee.
The other two factors not being mentioned happen to be customer migration and the Occupy Wall Street protests. Bank of America announced its plan smack-dab in the middle of an anti-corporate greed protest movement. The fees were interpreted largely as yet another example of corporate greed at the expense of the consumer.
But more than #OWS, the reason Bank of America is walking back on this plan certainly has to do with the number of customer defections. The only time a big corporation walks away from a scheme to make more money is when they misjudge, overstep and put a plan in place which threatens its bottom line.
There are no numbers of customer defections in the time period between the announcement of the fee last month and the announcement of the fee’s cancellation, but we would imagine it was great enough to draw the attention of Bank of America’s decision makers.
At the end of the day, however, Bank of America still needs to pacify its shareholders and still needs to find a way to replace that missing $2 billion in revenue. So, yes, consumers won this round, but don’t think for a second that Bank of America isn’t cooking up another fee or proposal to get paid.