DDA Fees on the Front End

by Mercator Advisory Group 0

As many financial institutions are considering ways to recapture lost retail DDA income, the entire range of potential transactions is in play, including deposits. Seemingly counter-intuitive from a retail DDA perspective, deposits, as in “loads”, are viewed quite differently in the prepaid card market. As this author points out, it is the norm, not the exception to charge consumers to put funds into a prepaid card account. The key difference is the availability of deposit locations and the spend ability of the funds.

“Prepaid consumers are willing to pay $3 to $5 per deposit (a similar cost to foreign ATM transactions) because GPR prepaid cards combine three innovative features: the ability to deposit 24/7 at a diverse number of retail locations and get immediate access to funds deposited.”

The problem is that this type of fee may only be truly relevant for consumers who don’t use direct deposit, which probably means an LMI consumer. Fee structures dependent on LMI consumers is what drew the attention of regulators to begin with – think overdraft fee legislation – so, let the fee generators beware and be competitive.

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