Phil Goldfeder, CEO of American Fintech Council, right, interviews Rohit Chopra, Director, Consumer Financial Protection Bureau, on the keynote stage at Fintech Nexus USA 2023 at the Javits Center in New York City. | John K. White, Fintech Nexus
Phil Goldfeder, CEO of American Fintech Council, right, interviews Rohit Chopra, Director, Consumer Financial Protection Bureau, on the keynote stage at Fintech Nexus USA 2023 at the Javits Center in New York City. | FILE - John K. White, Fintech Nexus

Global newsletter: Breaking the bank fee habit

The following is an excerpt from today’s Global Newsletter.

It’s no secret that many traditional banks have relied on credit card late fees to bolster their bottom lines. It’s easy cash for them, but it’s an intensely punitive practice that can pressure consumers with crippling compounding debt.

After the CFPB proposed slashing credit card late fees to just $8 a month in February, the reaction has been swift and predictable — banks raged.

It’s time for them to rip off the late-fee Band-Aid and find new income streams. This would be an opportunity to adjust business models and determine how to drive value beyond late fees. Those banks that figure it out will be lightyears ahead.

A simple shift to subscriptions would replace the revenue and be much more palatable for consumers if they knew late fees were dusted in exchange for a modest monthly cost.

Banks also have to know there are many in Congress coming after these fees.

Fintechs have built their businesses on a no-fee subscription model for years, and if banks get it figured out, it would be interesting to see how it impacts competitiveness in the industry.

regional banks

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  • John K. White

    John has been in communications since graduating from Creative Communications at Red River College Polytechnic in Winnipeg in 1992. He launched one of Canada's first digital-only local news sites called Winnipeg First in 2007, which led to digital editor postings with the Winnipeg Free Press and Edmonton Journal. In 2012 he joined Bankless Times as managing editor, later becoming president and CEO. He and the Bankless Media co-founders completed a sale and exit in August 2021.