Wells Fargo & Co, the bank with the biggest US branch network, will no longer enroll customers in debit-card rewards programmes following a proposed cap on interchange fees.
“Due to pending regulatory changes that are expected to result in a significant reduction in fees retailers pay issuers for debit-card transactions, Wells Fargo will no longer be enrolling customers in the debit-card rewards programmes,” Lisa Westermann, a spokeswoman at the San Francisco-based bank, said in an e-mail.
The change includes both stand-alone programmes and those where customers combine their debit and credit card into a single programme, Westermann wrote. Customers already enrolled in the program meand credit-card holders will not be affected.
Wells Fargo’s change comes in response to a Federal Reserve rule, required as part of the Dodd-Frank Act approved last year by Congress and signed by President Barack Obama, that would cap the fee card networks can charge merchants at 12 cents a transaction. It replaces a formula that averages 1.14 per cent of the purchase price or about 44 cents.
The new policy will take effect from March 27 for customers with a Wachovia Corp account and April 15 for Wells Fargo customers, according to the e-mail. Wells Fargo purchased Wachovia in 2008 for $12.7 billion.
Wells Fargo offers programmes that provide cash back, travel and merchandise awards, and gift cards among other options for consumers and businesses, Westermann said in a phone interview.
Banks fought passage of the legislation and are working with lawmakers to derail it. Senator Jon Tester, a Montana Democrat, is the chief sponsor of a bill that would delay the rule for two years, and Representative Shelley Moore Capito, a West Virginia Republican, introduced a similar measure.
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JPMorgan Chase & Co will stop offering debit-card rewards for almost all of its customers in July, the bank said this week. Issuers including the largest banks could lose $12 billion in annual revenue under the change, scheduled to be implemented July 21.
Wells Fargo Chief Executive Officer John Stumpf said limits on fees charged to merchants for debit-card transactions “make no sense” and distort free-market economics.
Wells Fargo shares have gained 2.8 percent in the past 12 months.