Banks face a cringing need to find ways to offset Durbin Amendment revenue losses, which markedly slashed interchange fees. Many have responded with discontinued free checking and rewards programs. There are a host of revenue enhancing initiatives also in the works.

One of the more interesting efforts has to do with so-called direct deposit loans, which will provide a credit to a retail account for a fee--about $7.50 per $100 borrowed. This looms as a very interesting counter cyclical source of fee revenue, as many small customers are tapped out in a poor economy and could use what amounts to an expensive cash advance.

Critics have called such programs payday loans masquerading under a different name. But the likes of Wells Fargo, U.S. Bank and Fifth Third Bank would argue that they offer superior products. As the AP notes, Wells Fargo caps the loan at half the account or $500, whichever is less. The fees are about half what typical payday loan providers charge, and you can only borrow for six months in a row before you are forced to take a one-month break.

This looms as a huge win for the industry as they eat into the revenue of less reputable payday lenders. It will be interesting to see what, if anything, Bank of America comes up with. The Payday loans business, unfortunately, seems very strong right now. And banks have no choice but to continue to look for more fee revenue, to the chagrin of people who may be tempted to conclude that the Durbin Amendment has backfired.

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