A Dose of RealityTheodore Iacobuzio |
The other shoe drops. They aren’t shooting blanks. Mix up the metaphors any way you like. What comes out of the shaker is bitters neat: fees are back in U.S. banking big time. As your agent has pointed out in this space previously, there is no free lunch.
So here’s a third metaphor to throw into the cocktail: When in Rome…
One of the reasons that MasterCard has been so successful with its new prepaid debit program in Italy is the very high relative cost of maintaining an actual full-blown current account there. It can cost consumers as much as €75, but averages out at about €45. So, naturally, a prepaid card is a great alternative.
Now some U.S. banks are, thanks to “Durbin,” forced to charge cumulatively as much as $17 or $20 monthly to run a DDA account. It’s not €45, but it’s not free, either.
There’s more going on here than backfilling a revenue shortfall. It’s about whole swathes of the DDA portfolio rendered unprofitable by a stroke of the legislative pen. If the goal is financial inclusion, then the Italian model, migrating to prepaid consumers unwilling to pay those fees, makes a lot of sense, doesn’t it?