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Fitch: New U.S. Debit Card Rules Would Pressure Bank Fees
August 6, 2013 / 2:06 PM / 4 years ago

Fitch: New U.S. Debit Card Rules Would Pressure Bank Fees

(The following statement was released by the rating agency) CHICAGO, August 06 (Fitch) Last week's ruling by a Federal District Court judge that aims to lower debit card fee caps has the potential to significantly reduce fee revenues U.S. banks earn from consumer debit card transactions, according to Fitch. We estimate that between $4.9 billion and $6.9 billion in annual fee revenues may be at risk if the per-transaction fee caps are reduced to between 7 cents and 12 cents, as suggested in the court ruling. That said, Fitch expects the current fee structure to remain in place until the Fed rewrites the existing rules or appeals the Court's decision, either of which could be a lengthy process. We believe the banks most likely to be impacted by the ruling are Bank of America, Wells Fargo and JP Morgan Chase. Together, these institutions have accounted for more than half of total U.S. debit card volume in recent years. If the reduced fee structure is approved, we believe banks would likely seek to recover lost revenues by adding new cardholder fees and/or increasing existing ones. Any existing card benefits could also be reduced or eliminated as banks look to cut costs. It also remains unclear whether merchants would be willing to pass on the savings to consumers through lower prices. Fitch does not expect the prospect of lower debit card transaction fees, by themselves, to have an impact on bank ratings. Contact: Brendan Sheehy Director Financial Institutions +1-212-908-9138 Bill Warlick Senior Director Fitch Wire +1-312-368-3141 Fitch, Inc. 70 W. Madison Chicago, IL 60602 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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