Is the government, in its attempt to limit bank fees for merchants who accept Visa and MasterCard debit cards, inadvertently making basic banking services too expensive for many US consumers?
Here's what JPMorgan boss Jamie Dimon said, re the Durbin amendment (Sen. Dick Durbin, D-Ill. wrote it into last year's bank reform law) in his quarterly conference call last week: (thanks to Len DeProspo at Janney for the link):
"Part of what happened in Durbin was this... false premise... that retailers pay zero for cash, and zero for checks... The fact is, cash cost retailers... They’ve got to process it, handle it, move it, ensure it; bank it. They need registers... Checks cost... for the same basic reasons...
"This debit [card] thing had enormous benefit for consumers, even for retailers. It was faster." But debit cards, and accounts for people without a lot of deposits, aren't profitable anymore, with the new fee limits, Dimon says. "The consumer has got to pay," if the merchant doesn't.
So how are the banks going to make consumer banking pay in the future? "We don’t exactly know. We’re going to test a whole bunch of things... We might just charge for checking.You might charge for debit. You might just have higher deposit balances... The general banking customer base may be pushed out of the banking system."