New opt-in requirements for debit card overdraft protection likely will reduce U.S. Bancorp’s revenue by more than $250 million this year, while changes from the CARD Act will cut the company’s revenues by another $160 million to $180 million, the company said Oct. 20 when announcing its earnings for the quarter ended Sept. 30.

The bank is contemplating introducing a monthly service fee for checking accounts to offset some of its lost revenues, but no timetable has yet been set, Richard Davis, U.S. Bank chairman and CEO, told analysts during a conference call to discuss the quarter’s earnings. “We’re taking a little longer to learn what the right answer is.”

The bank may waive checking fees for customers with “deeper” relationships or for those who routinely conduct “different value transactions,” he suggested.

The overdraft-protection changes are the result of new Federal Reserve Board rules that took effect July 1 and pertain to Regulation E of the Electronic Funds Transfer Act. The CARD Act took effect beginning in February and includes restrictions on increasing customers’ interest rates and requires issuers to apply minimum payments to borrowers’ highest-interest balances first.

U.S. Bancorp’s Payment Services unit generated $215 million in net income during the third quarter, up 194.5% from $73 million during the same period a year ago.

Consumer credit and debit card revenue totaled $271 million, up 2.3% from $265 million, while corporate payment card revenue rose 5.5%, to $191 million from $181 million. Revenue from merchant processing services rose 6% to $319 million from $301 million.

Retail credit card purchase volume during the quarter totaled $11.9 billion, up 13.3% from $10.5 billion. Charge volume for corporate cards totaled $12 billion, up 14.3% from $10.5 billion. Debit card transaction volume during the quarter totaled $10.5 billion, up 10.5% from $9.5 billion a year earlier.

The charge-off rate on retail and commercial products was 6.08% during the quarter, down 23 basis points from 6.31% a year earlier. The unit’s provision for loan losses declined 37.9%, to $307 million from $494 million.

Merchant-acquiring volume totaled $67.2 billion, up 8.4% from $62 billion. Total merchant transactions rose 7.7%, to 752.6 million from 699.1 million.

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