The architect of US interchange reforms, US Senator Dick Durbin, has demanded that Wells Fargo explains the need for the imposition of monthly charges on customers to use debit cards, just days after the bank posted a 21% rise in third quarter profits.
The new fee, currently being tested in five states, is similar to the $5 penalty charge Bank of America announced last month to wide criticism from its customers.
Bank of America's actions has prompted outraged comments from customers and sparked a scramble among community banks and technology vendors to entice consumers away from the bank with better deals and promises of easy account opening and switching products.
In an open letter to John Stumpf, CEO of Wells Fargo, Durbin says the planned charges "far exceeds" any reasonable measure of the cost to the bank of conducting debit transactions.
Wells Fargo has not made publicly available any of its own cost or revenue data regarding debit transactions, but Durbin estimates that the bank will make at least an estimated $1.22 billion in annual debit interchange revenue after swipe fee reform.
States the letter: "Instead of making up costs, your new consumer fee appears to be a plain attempt to increase your profits - even though your bank just reported third quarter profits that hit a record high."
Durbin - who pocketed a fair chunk of change in campaign donations from the retail lobby - has been painted as the villain of the piece by banking institutions as they look to claw back some of the revenue lost by the imposition of a new ceiling on retailer debit transactions.
In his letter to Stumpf, the US senator hits back, claiming that banks were milking a revenue stream that was immunised from competitive pressures by the Visa/MasterCard duopoly.
"It is disingenuous for banks to claim they are somehow entitled to make up reductions to a revenue stream that they never would have received in the first place in a transparent and competitive market," he says.