It's hard to resist a customer revolt.
After the marketplace spoke, the Bank of America folded.
The nation's second-largest bank announced Tuesday that it is bowing to overwhelming public resistance to its plan to charge a $5-a-month fee to its customers who use the bank's debit card and has cancelled plans to do so.
Two factors were at play here.
The bank was enduring not just public criticism but a loss of business. Customers were taking their business elsewhere.
Second, other banks interested in following Bank of America's lead watched the beating Bank of America was taking and had second thoughts.
If fees like this are a fact of life in the marketplace — in other words, if all the banks are doing it — customers have a tendency to throw up their hands in disgust and live with it. But Bank of American was all alone, and that proved untenable.
Bank of America as well as other prominent banks like JPMorgan Chase, Wells Fargo and SunTrust were interested in the debit card fees to replace $6.6 billion in expected 2012 losses caused by a new federal rule that limits the fees banks can charge merchants when their customers use a debit card.
That's a big loss, and it's no surprise the banks are looking for replacement income.
Critics, however, argued that the banks wanted to charge people for access to their own money. But that's a simplistic argument. Bank of America wanted to charge its customers for access to their own money through a sophisticated and expensive system that converts a plastic card in someone's wallet into the functional equivalent of cash.
By any estimation, that is a service for which a bank could reasonably argue it is entitled to be compensated.
But the bank's customers prefer no charge to a $5 charge, and they let it be known they were willing to go elsewhere unless they got what they wanted. After a couple weeks of fierce resistance, Bank of America's brass got the message.