Wells Fargo, the third-largest
US bank by deposits, announced on 25 March its debit card rewards
programme and combined credit and debit loyalty programme would end
for new customers on 27 March at former Wachovia branches and from
15 April at Wells Fargo branches.
For the time being, current Wells
Fargo customers will remain unaffected by the changes.
Go deeper with GlobalData
If the Durbin Amendment contained
in the Dodd-Frank Reform Act passes unamended – it would slash by
around 70% the fee banks can charge merchants for debit card
transactions to a maximum of $0.12 – Wells is expected to end its
rewards programme for all customers.
The Wells Fargo programme rewards
customers with one loyalty point for every $4 spent in net debit
card purchases when customers have their credit card and debit
cards enrolled in the loyalty scheme.
The head of Wells Fargo’s debit
card business unit, Edward Kadletz, has said that the bank could
not afford to fund a rewards programme if the Federal Reserve
confirms the Durbin Amendment.
In a letter to shareholders, Wells
CEO John Stumpf said government restrictions on debit card fees
make no sense.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“They distort our market-based,
free-enterprise economy,” said Stumpf.
A final ruling on The Durbin
Amendment had been expected from the Federal Reserve on April 21
but on 30 March, details emerged of a Senate debate in early April
on a proposal to delay implementation of the legislation.
JPMorgan Chase and SunTrust, the
second- and 10th-largest US banks by deposits, respectively, have
already said that they could not afford to offer a debit rewards
programme if the amendment is approved.
Atlanta-headquartered SunTrust
notified customers it would axe its SunTrust Rewards programme for
current accounts from 15 April. SunTrust customers have been told
to redeem their accrued loyalty points by the end of the year.
Chase has been slightly more
generous and said its customers’ accrued loyalty points will not
expire; it will stop offering rewards points on debit card
purchases from 19 July.
Chase withdrew the loyalty scheme –
its 3% cash-back debit scheme was one of the most generous options
offered by any US lender – for new customers in February.
The country’s largest retail
lender, Bank of America has yet to announce any changes to its
loyalty programme.
The country’s fourth-largest bank
by deposits, Citigroup (Citi), has said no more than it is
“evaluating” its position if the debit card fee is cut.
But on 29 March, by contrast with
news of its rivals withdrawing or paring back loyalty schemes, Citi
announced an extension of its credit card-based ThankYou programme
to enable members to earn and redeem points from major US retailers
Best Buy and Buy.com.
In addition, Citi has announced a
new points transfer programme that lets members share points with
friends and family.
Citi executive vice-president,
North American Cards, Terry O’Neil said: “Our priority is to focus
on benefits and rewards that are compelling to our members and
enhance the overall ThankYou experience. “Direct feedback from our
members played a key role in shaping these latest enhancements.
“
According to a Colloquy, a US-based
consultancy which tracks loyalty programmes, the average US
household has been estimated to participate in 18 consumer rewards
programmes.
One of the better remaining rewards
programmes is offered by online bank, PerkStreet. It offers 2%
cash-back for debit card purchase, but only for non-PIN swipe
transactions and only to customers maintaining a minimum balance of
$5,000 in a 0% interest account.
