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Debit-card users stuck with new PIN fees.
Just when you thought banks couldn't possibly come up with another fee, here's another fee: a charge for certain debit-card withdrawals.
Early this spring, KeyBank informed some customers that it would charge 25 cents each time they punched in their PIN to pay with their MasterCard debit card. They could save the quarter, however, by pressing Credit, not Debit, on the keypad. They'd have to sign their name to the invoice as with a credit card, but the money would still come out of their checking account, as with any debit card. Computers would sort it out.
Maybe you've encountered this PIN fee, or will soon. Of the 10 banks that issue the most debit cards, 5 now charge some customers 25 cents to $1.50 each time they use a PIN. Other banks offer incentives to steer customers away from using their PIN. CitiBank's debit card earns air miles, but only when you sign. Elsewhere, "Skip the PIN and Win!" promotions offer customers a chance to win cash or, in one case, a Chrysler PT Cruiser if they press Credit and sign.
Behind all this is a big-money tug-of-war between merchants and the credit-card and debit-card giants, Visa U.S.A. and MasterCard International. Banks are aligned with Visa and MasterCard. More on that later. As a consumer, you are a virtual bystander, but it behooves you to know what's going on.
WHAT'S AT STAKE
Debit cards were once solely the province of banks, and paying by PIN was the routine, handled over regional banking networks such as NYCE or MAC. In recent years, the credit-card powerhouses have muscled in. Most debit cards today bear a Visa or MasterCard logo. The regional banking networks still buzz whenever you pay by PIN. But when you sign, it's the credit-card networks that carry the traffic. At stake are billions in transaction costs.
"There are a lot of fingers in the pie: issuing banks, merchants' banks, networks, support people," says Robert McKinley, chief executive officer of CardWeb.com, which tracks bank cards. But, he says, it's a pocketbook issue for merchants. On a PIN transaction, the store pays a flat 20 cents; on a signature transaction, it pays 1.9 percent of the total. You spend $100 with your debit card, and the store pays either 20 cents or $1.90. While merchants want you to use ...
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