Those new debit and checking fees, already being rolled out in test markets across the U.S. by the megabanks as well as a handful of regionals, do “provide an opportunity for differentiation” from credit unions.
That was the assessment Wednesday by card and marketing consultant the Raddon Financial Group, which has been tracking the moves by Chase, Wells Fargo and others who are imposing debit fees to recoup interchange revenue under Dodd-Frank.
Wells Fargo has said it will start charging a $3 monthly fee for its debit cards starting Oct. 14 among checking account holders in Georgia, Nevada, New Mexico, Oregon and Washington. The $3 fee would be in addition to monthly service fees.
“And yes we’ve known about Chase test marketing $3 debit fees starting four months ago in northern Wisconsin, as we understand it in the Green Bay area,” said Bill Handel, vice president/research and development for Raddon in Lombard, Ill.
Handel said his firm will soon send out advisory newsletters describing the “differentiation approach” in distinguishing CUs from bank competitors. He said he expects “95 to 100% of credit unions will avoid the fees” for now.
Over time, “we anticipate the interchange income will come down,” forcing new decision making by CUs as market pressures build while margins have declined, Handel said.
Greg Hilbert, president/CEO of the $800 million Fox Communities CU of Appleton, said he had heard about the Chase move in his market “but we haven’t seen any response so far” from members.
“We are now just waiting on those announcements expected from Visa and MasterCard coming Oct. 1 about what changes they have in store,” said Hilbert, adding his describing his own CU will stand pat on its current fee structure.
Joking about all the prognostication, he said, “We keep hearing about market forces altering the environment and now we’re just waiting to see what it really means about all those nebulous forces driving the market.”