Tuesday, August 02, 2005

If Writing Checks is Free and Processing Checks is Free, Shouldn't There Also be No Interchange Fee Too? (commentary: WayTooHigh.com)

Have you ever seen those advertisements for banks' free checking offers?

Several offer check writing with no monthly maintenance fees or charges to bank at ATM's, online and by phone. With no minimum requirement, Bank of America, for example, offers free online banking with free bill paying and a free Bank of America Visa® Check Card with Total Security Protection® and Photo Security® . The website explains that it is all free.

When you write a check, there is zero interchange fee, there is no charge to the consumer or retailer who accepts the check, yet we all know how costly and the amount of labor required to process and clear checks.

Citibank even offers free checking with direct deposit and your first order of checks are free too.There is even no charge for Citibank ATM transactions and no charge on non-Citibank ATM transactions. The bank provides programs for unlimited free check writing.

How about all these free perks from Wachovia Bank, N.A. and its no-strings attached free checking. It looks like everything is free. The bank has "re-invented its personal free checking account to better meet consumer needs. Extra Free Checking requires no minimum balance, has no monthly service fee, and unlike many banks' free checking accounts, does not require direct deposit. It also comes with the Visa Extras debit rewards program and Free Online BillPay." Some of the features of the Wachovia "extra free checking account" include: no minimum balance, no monthly service fee, unlimited check writing, no direct deposit required..., free online banking and online BillPay, free check card with Visa Extras rewards program, unlimited visits to Wachovia financial centers, Wachovia's automated phone service, Wachovia ATMs, plus access to SouthTrust ATMs to get cash or check balances with no fees.

Bank One Net Checking® provides no fees for transactions, withdrawals, bill payments or balance inquiries, unlimited check-writing, convenient use of ATM, Direct Deposit or Bank-by-mail, make withdrawals at Bank One® Money Access Center® ATMs for no fee, unlimited transactions with no fee for withdrawals and balance inquiries at Bank One® Money Access Center® ATMs, by phone or when you make purchases with The One® Business Card SM and you can use its direct deposit and bank-by-mail services with no transaction fees.

The point is that there are no "points," no fees, no charges, no costs, nothing. Yet, credit card transactions face supracompetitive interchange fees which are a hidden tax on consumers.

(commentary: WayTooHigh.com)