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JPMorgan Chase & Co. is considering limiting the size of purchases allowed on its debit cards in response to the Federal Reserve Board's proposed cap on interchange fees.
February 18 -
As more banks prepare to charge for basic products, a carrot-and-stick strategy with customers may work better than a more punitive approach.
January 6 -
Debit card issuers' rewards programs are already being rewritten — and in some cases eliminated — in advance of the Federal Reserve's new interchange rules.
November 9 -
JPMorgan Chase & Co. said it will phase out debit rewards programs as it braces for changes stemming from pending Federal Reserve rules.
November 8
JPMorgan Chase & Co. plans to end debit rewards for at least some current customers in July, according to a letter being sent to customers that cites the Durbin amendment as its reason.
"Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards," the New York company’s letter said. "As a result of this law, we will be changing our debit rewards program."
In accordance with the law, the Federal Reserve Board proposed capping the fees that issuers earn on debit transactions at 12 cents. The current average is 44 cents.
The letter said customers can use their Chase Freedom Credit Card, which the Fed’s proposed cap would not affect, to continue earning points.
JPMorgan Chase stopped issuing debit rewards cards to new customers in February, a decision it announced in December. At the time, the company said it had not decided how to handle current customers who participated in the program, which allows them to earn points on purchases they authorize with a signature.
The letter states that debit rewards customers will not earn points on purchases after July 19, two days before the interchange caps are to take effect. To earn points, transactions most post to a customers' account by July 22, a footnote to the letter states. Customers' points will not expire and they will not need to receive a new card, according to the letter.
The letter did not say how many customers are affected by the new policy. A spokesman for JPMorgan Chase did not provide comment Sunday.
JPMorgan Chase and other large debit card issuers, including Bank of America Corp., have also added new monthly fees for checking account customers, blaming the Durbin amendment.
An executive at JPMorgan Chase said in February that the bank was also considering capping the size of transactions customers can make with a debit card to as a way to curb fraud. The Fed's proposed interchange caps do not take into account the cost of fraud.
JPMorgan Chase is also testing automated teller machines with fees as high as $5 for non-customers in some areas.
