JPMorgan Chase & Co. (NYSE:JPM), the largest and most profitable U.S. bank, will launch a reloadable prepaid card in its 5,541 branches this summer, aiming to attract new customers and recoup fees it's lost under recent regulatory changes.
Chase is the latest among the big banks to offer prepaid monthly debit cards, which are designed for lower-income people who can't afford fees that come with basic checking accounts.
Prepaid debit cards work like a traditional debit card, but are not linked to a checking account.
The New York-based company said that its Chase Liquid card will have a $4.95 monthly fee. Customers will be able to refill their cards with cash or checks for free and withdraw cash from Chase ATMs or tellers without being charged. However, customers must make an initial $25 deposit onto the card.
Chase Liquid is a low-cost alternative to traditional checking accounts, and its terms are clear and simple, Ryan McInerney, chief executive officer of Consumer Banking at Chase, said in a statement.
Six months after big banks scrapped plans to impose checking fees following a public outcry, they are now looking for new ways to generate revenue.
The Durbin amendment sponsored by Sen. Dick Durbin (D-Ill,) which took effect in October, reduced nearly half the amount of fees big banks like Chase and Bank of America Corp. (NYSE: BAC) can charge merchants each time a consumer swipes a debit card.
However, a loophole in 2010's Dodd-Frank financial reform law allows banks to charge merchants relatively high fees for processing payments with prepaid debit cards.
U.S. consumers are expected to load about $160 billion onto these prepaid cards in 2014, up from about $50 billion in 2011, according to Mercator Advisor Group.
U.S. Bancorp (NSYE: USB), BB&T Corporation (NYSE: BBT), Regions Financial Corporation (NYSE: RF) and American Express Company (NYSE: AXP) are among other financial companies that also sell reloadable prepaid cards.
Shares of JPMorgan Chase fell 1.79 percent, or 74 cents, to close at $40.64 in Wednesday's trading.