May 16, 2011/NEW YORK/Business Wire/   A recent study by the Auriemma Consulting Group (ACG), published in the syndicated monthly The Debit Report, compared debit card preferences among consumers.  The study was undertaken to develop guidelines to replace income that may be lost under the Durbin amendment.

“ACG research has consistently shown that consumers react more strongly to the payment amount than to the total cost of service,” said Dr. Patricia A. Sahm, Managing Director at ACG. “A majority of study respondents would prefer a $5 monthly fee for a checking/debit card account over an annual fee of $12 and a per-transaction fee of 7 cents. Given their average of 18 debit card transactions per month, it would be less than $30 annually, compared to $60 for the monthly payment option.”

But simply adding a fee may be difficult for most debit card users to accept.  The ACG study finds that only 12% of debit card holders currently pay an annual fee, while another 20% have minimum balance requirements.  The vast majority of debit card users, approximately two-thirds, are those with free checking/debit cards.

“As we move from an environment where no-fee debit/checking is the norm, the desire to avoid fees may help banks with deposit and asset-gathering, giving them more opportunity in investment and wealth management,” predicts Dr. Sahm.  She addes, “”Minimum-balance requirements are more palatable than maintenance fees, especially for the more affluent customers.”

Key findings from the ACG study include:

• By a large margin, debit card holders would rather give up their rewards program than pay annual or transaction fees.

• About a third of the consumers surveyed got rewards for their debit card usage, and these incentives are effective in diverting more spending to the card.

• Debit card holders with rewards put $626 of their monthly spending on that card, compared to $346 for non-rewards cards.

• If bankers stop receiving revenue from debit card transaction, they may be incented instead to discourage usage.

There are other ways in which Durbin-induced fees could have unintended consequences, noted Sahm. “Minimum-balance requirements are more palatable than maintenance fees, especially for more affluent customers. As we move from an environment where no-fee debit/checking is the norm, the desire to avoid fees may help banks with deposit and asset-gathering, giving them more opportunity in investment and wealth management.”

Source: BusinessWire/The Debit Report