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The U.S. Consumer Financial Protection Bureau shared a rather interesting development on Tuesday: Consumers are incurring fees to access their own funds when they use debit or prepaid cards to receive “cash back” at major retailers during a purchase.
Such Cash back fees are emerging against the backdrop of bank mergers, branch closures and widespread out-of-network ATM fees, all of which have reduced the availability of free cash access points for consumers, the CFPB explained in a report. Retail chains have traditionally offered free cash back on debit card purchases.
“Many people living in small towns no longer have access to a local bank where they can withdraw money from their account for free,” said CFPB Director Rohit Chopra. “This has created the competitive conditions for retailers to charge fees for cash back.”
The consumer watchdog found that three companies in a sample of eight major retailers (Dollar General (New York Stock Exchange:DG), Dollar Tree (NASDAQ:DLTR), Hooks (New York Stock Exchange:KR), Albertson (New York Stock Exchange: ACI), Walgreens (NASDAQ: AMB), CVS (New York Stock Exchange: CVS), Walmart (New York Stock Exchange:WMT) and Target (TGT) charge cash back fees and estimate they collect more than $90 million a year.
Dollar General (DG), Dollar Tree (DLTR) and Kroger (KR) were the top three retailers that charged cash-back fees. And the marginal cost to merchants for processing each transaction can be just a few cents, compared with the much higher fees these retailers charge consumers, the regulator said. My dear.
Card issuers: American Express (New York Stock Exchange: AXP), Financial Synchronization (New York Stock Exchange:SYF), Capital One Financial (New York Stock Exchange: COF), Discover Financial (New York Stock Exchange:DFS), Bread financial holdings (New York Stock Exchange:BFH).
Credit Card Networks: Mastercard (New York Stock Exchange:MA), Visa (New York Stock Exchange:V).
