The death of the debit card?


Unlike when I first moved to the state almost 20 years ago, you don’t see many people with their checkbooks in hand at the checkout line anymore, thanks to the debit/ATM card. Minnesota, more than any other place I’d visited, had a love affair with the checkbook.

Cup of coffee? Hang on while I write this check. Minnesotans seemed to write checks for everything.

That all ended when the debit/credit card replaced it, but are the heady days of checkbooks in the back pocket about to return?

Bank of America announced today that it’s going to start charging $5 a month for its customers who use debit cards.

The announcement coincides with the October 1 start of the Dodd-Frank Act’s Durbin amendment, which caps fees banks can charge merchants for processing debit cards to 21 cents per transaction, potentially costing banks billions of dollars in fee income.

Plug a leak somewhere, it’ll sprout somewhere else. There’s a reason why banks have the biggest buildings in most cities.

Wells Fargo has been testing a $3-a-month fee in some states to see if people will rebel against it. The test markets do not include Minnesota, however.

It’s not just the banks that are causing a big jump in plastic. VISA and Mastercard are planning to sharply raise the debit card transaction fees for small purchases for merchants, according to an analyst note today.

As the Associated Press reported, it’s going to change the way you pay for things…

Such a hike could pose problems for the operators of self-service kiosks like DVD rentals, which would have to deal with a big increase without alienating customers, the analyst said. It also risks alienating important merchants like Starbucks Corp. that rely on small purchases, he said. “These operators will be violently opposed to this price change,” and could slow down their investments in new technology needed to accept mobile payments in response, Janney Capital Markets analyst Thomas McCrohan said. It will also “reinforce merchants’ view that the networks are not friends of merchants.”

And the increased costs of transactions undoubtedly will be passed along to consumers. Will gas stations again have a two-tiered pricing system — one for debit/credit and one for cash? Will your $1.84 coffee go to $2?

And, most important, are you the consumer going to accept the cost of debit cards or change the way you pay for things? Will cash make a comeback? Is the checkbook still alive?