Over the years people have come to prefer the use of debit cards as compared o credit cards for it gives them direct access to their accounts. It eliminates the need of carrying cash or the need to write a check and show your identification while making a transaction. It also prevents bad debts. Until recently, using debit cards for transactions has been affordable since the fee charged was very small of up to 44 cents in a transaction (Martin and Andrew 2010). The Bank of America together with other banks has started to charge $5 a month for customers using debit cards controlled by the Durbin Amendment. Although some market analysts see this as a good move by the banks to make fees more visible, it has negative effects on the consumers. Therefore banks should not be allowed to charge fees for using debit cards.
Characteristics of the audience
The audience have the power to scrutinize criticize the arguments. They can make an informed decision based on the arguments. The audience is assumed to be informed on the market changes that are ongoing in the banking industry.
Genre
The selected genre is Business. This was selected because of the ongoing misunderstanding between the debit card users and the banks making it necessary to clarify the impacts of debit card fees. It is also a vast and rich genre full of lots of information.
Scope
This paper seeks to bring to light some of the negative impacts of charging $5 dollars a months to debit cards users by banks. This includes inconvenience to the users, increased fees charged on their checking accounts and eliminations of any saving benefits from stores that they used to get by using the cards. This brings about questions like: How convenient is this cap to the consumers as compared to before? How affordable is this cap to the debit card users? Will retailers benefit from it? These questions are answered in the discussions below (Martin and Andrew 2010).
Research plan
I intend to carry out research by issuing questionnaires to debit card users to gather some information and views on the increased fee on debit cards. In addition I will research in the internet and books the effects of making such an amendment to the charges on the debit cards. The research will include pre fee inclusion and post fee inclusion benefits to the users and banks.
Firstly, charging such an amount every month the consumers uses their debit card is inconvenient. This is especially so if the said consumer uses their debit card once a month. It may seem a good move to charge only when the debit card is used but it beats logic if one uses it only once a month and another uses it many times and yet are charged the same fee. IT could have been more convenient if that rate was proportional to the number of times one uses their card as instead of being a fixed charge (Johnson, 2010).
In addition the charging of increased fees in the debit card users’ checking account is not favorable. Initially the cost was based on transactions done using credit cards and was affordable. This was because the fee per transaction was about 44 cents. (Forgue 2010) Charging a $5 to the accounts of debit card users who initially used to be charged cents per transaction is going to be a burden to them. Coming to think about it, the cumulative charges of using the debit card a year will be $60 which is a lot to certain people.
It is also true that the users of debit cards will not benefit from savings from stores. This is because merchants are not likely to extend savings to the debit card users after this cap takes effect. The reason is that it is predicted that retailers are less likely to benefit from this cap and may end up paying more and in turn the shopper too will pay more (Forgue 2010).
References
"India card to replace Master, Visa". mydigitalfc.com. 6 December 2009.
Washington D.C.: FTC. Garman, E. T. and R. E. Forgue. (2010). “Personal finance “(8th ed.). Boston MA: Houghton Mifflin Co.
"Barking Up the Wrong Tree – Factors Influencing Customer Satisfaction in Retail Banking in the UK - Page 5". Managementjournals.com. Retrieved 2011-02-11.
Andrew Johnson (2010) “Emboldened, Merchants Expected To Push Cheaper Payments”. Retrieved 2010-08-25.
Lawrence J. Gitman, Michael D., Joehnk, Randall S. Billingsley (2010), Personal Financial Planning. Toebben: Cengage Learning.
Martin, Andrew (2010). "How Visa, Using Card Fees, Dominates a Market". New York Times. Retrieved 2010-01-06.
