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Will mobile banking fees turn away consumers?

March 12, 2013

Mobile deposit is one of the services PNC offers

PNC bank is reportedly considering charging customers a fee when they use their mobile phones to deposit a check, a service that is now free.

One of the attractions of mobile banking for consumers has been convenience but the fact that these services are typically free has also played a role. The question is whether by tacking a fee onto mobile deposits, this might slow the adoption of mobile banking.

“This would without a doubt slow the adoption of mobile banking,” said David Kaminsky, emerging technologies analyst at Mercator Advisory Group, Maynard, MA.

“The reasoning behind this type of measure would be that although mobile banking adoption would slow, the slower adoption would be more profitable,” he said. “I’m not sure if that is the case, but it would be the only thought process that would lead to a decision like this.

“In a low interest rate, post-Durbin world, banks are looking for ways to monetize any service they offer.  Mobile-based services are not exceptions.”

New fees
Banks have quickly built up their mobile offerings over the past couple of years in response to how quickly consumers have embraced mobile banking services. However, with banks under pressure to make money, with many looking at new fees as a way to do so and mobile banking services – which have typically been free – is one area they are considering bringing fees to.

The possibility of a new mobile deposit fee was mentioned by a PNC executive at a Citigroup  analyst event last week.

The bank initially focused on mobile banking to save costs, but is now recognizing that it is a value-add service for customers and that they can charge consumers for depositing a check via mobile so they do not have to stand in line, the executive reportedly said.

The PNC iPad banking app

Mobile banking is not just convenient for customers, it is also more efficient for banks.

The PNC executive reportedly said that they bank saves $3.88 per transaction with mobile deposits compared to deposits made with a teller and that customers deposit around 10,000 checks per day via  mobile phones.

Cost efficiency
PNC would not be the only bank charging for mobile deposits if it makes such a  move. U.S. Bank currently charges 50 cents for each check deposited using its DepositPoint feature.

However, the service is still free at many other banks.

“I know that U.S. Bank is currently charging $0.50 for each check a consumer deposits via mobile, although I don’t know whether that has been successful in generating revenues or not,” Mr. Kaminsky said.

“What I do know is that mobile check deposit is slightly more cost efficient for a financial institution than ATM deposit, and significantly more cost efficient than teller deposits,” he said. “Consumers have shown time and time again that they are highly reluctant to paying fees associated with checking accounts, and I’m skeptical that this would prove to be different.

“It seems counterintuitive for banks to discourage consumers from using a tool that is more cost efficient to the bank than the alternative.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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