Wells Fargo in a letter to cardholders in five states announced its plans to assess a $3 monthly fee beginning October 14 for purchases made via debit cards, according to MyBankTracker. Wells Fargo is the second largest issuer of debit cards in the United States according to an April 2011 Nilson Report.
If the new debit card fee is applied to all 40 million customers at Wells Fargo, it will generate $1.44 billion dollars in new fees annually – more than offsetting the estimated $812.5 million per year in debit interchange fee revenue reductions, under the new debit card fee caps slated for October.
Wells Fargo Chairman and CEO John Stumpf recently told investors that consumers will end up suffering if there was no delay to the industry-changing debit card swipe fee rules, but simple math shows Wells Fargo’s new pricing ends up being a $627.5 million windfall of new profits for itself.
My prediction is that retailers and impacted consumers will see through the finger-pointing at WFB, creating ripe opportunities for its competitors to steal market share fast.