The Consumer Financial Protection Bureau is focusing on the fees retailers charge for cash-back services as evidence of a decline in overall access for cash-reliant consumers.
"Physical cash is still a critical component of a resilient financial system and dynamic economy. For many people, particularly older Americans and lower-income consumers, cash is the preferred way of paying for things. However, in many parts of the country, people can struggle to find easy and free access to their own cash," said Director Chopra in a blog post today.
Consumers in small towns and rural areas have been particularly affected by
But some of those same retailers are now charging a fee for cash-back services, he said. "Access to cash continues to be critical," he said.
The blog post comes on the heels of
Three firms charged a fee: Dollar General, Dollar Tree and Kroger. Dollar General and Dollar Tree Co., which includes Family Dollar and Dollar Tree stores, charged the highest cash-back fees for withdrawals under $50, according to the CFPB.
The CFPB estimates that consumers are charged roughly $90 million annually in cash-back fees from those three retailers, with underbanked and low-income consumers disproportionately affected as more banks
"The geographic distribution of dollar store chains and their primary consumer base raises concerns that these fees may be borne by economically vulnerable populations and those with limited banking access," according to the report. "Dollar stores are prevalent in rural communities, low-income communities, and communities of color; the same communities who may also face challenges in accessing banking services."
Dollar General charged a fee of $1 to $2.50 on a maximum withdrawal of $40 "depending on amount and other variables," whereas Family Dollar and Dollar Tree charged a $1.50 and $1 fee, respectively, on a maximum withdrawal of $50, according to the bureau.
Kroger Co., which includes Kroger, Ralph's, Fred Meyer, Pick 'n Save and Harris Teeter brand grocery stores, charged between 50 cents and 75 cents per cash-back transactions below $100, and between $3.00 and $3.50 on cash-back transactions over $100, depending on the brand.
Retail point of sale represents the second largest avenue – 17% of transactions – through which consumers secured cash from a bank account or prepaid card from 2017 to 2022. A vast majority – 61% of consumers –
Average ATM fees, including both customer-facing and back-end fees, range between $6.27 and $7.77, said Richard Crone, chief executive and founder of Crone Consulting, an independent advisory firm for the payments industry. Average cash-back fees, meanwhile, range between 50 cents to $2.50.
As a percentage of the total transaction, ATM withdrawal fees represent approximately 3.17% to 3.92% of the average withdrawal amount of $198, and cash-back withdrawal fees represent approximately 1.04% to 5.21% of the average withdrawal amount of $48, according to independent research from Crone Consulting.
The study comes as ATM withdrawal volume declines, Crone noted. In fact, the Federal Reserve
"The real attraction to the Consumer Financial Protection Bureau is what is [the fee] as a percentage of the money provided," Crone said.
