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Financial Institutions Planning Their Durbin Amendment Strategies

Some banks are ending their free checking services.

As the implementation of the Durbin Amendment nears, limiting the fees that can be collected on debit card transactions, the banks and other financial institutions that stand to lose revenue on their services are drafting survival strategies.

"Most banks and credit unions can’t make a profit on just interest income anymore," president and CEO of an Alabama credit union, Robert A. Steensma, told the Dothan Eagle. "They have to have fee income."

Some card companies, such as Visa, have restructured their fee plans and rolled out network participation fees for the merchants that accept debit cards, as a replacement for the so-called swipe fees.

Bank services that were traditionally free, such as maintaining a checking account may now come with a monthly fee. Previously, these services were funded by the interchange fees, but with the loss of up to $6 billion in annual revenue, the financial institutions will be looking to cut losses wherever they can, Credit News Line reports.

Beth Robertson, Javelin Research's director of payment research, told the source seven out of the top 10 banks have planned to do away with free checking. 

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