Gee, I wonder how they made money before debit cards were invented.
You wrongly imply that for a bank a debit card transaction, ANY debit card transaction, transacted through their bank’s system, is at zero cost to the bank, and therefor ought to be at zero cost to you.
Now, in most cases, if it is YOUR bank on both sides of that transaction - the bank that issued the debit card (including BOA) and the bank where you are using the debit card, they wave an extra debit card fee. Why? Because even just the “float rate” on your money behind the debit card helps to pay for the business of the debit card transactions for the bank that issued the card. But, what does a bank earn from the account behind a debit card issued by someone else? Zip; nada; zilch; except by direct debit card fees - which has ALWAYS been the case.
Most banks, including BOA, do not charge their own debit card customers, a separate fee when they make a purchase with the debit card and ask for cash back. Why? There has always been a built-in revenue stream back to the credit and debit card issuers from the retailers accepting transactions with their cards - pennies per transaction but it all added up.
So maybe you mean how did they earn their money before - vis-a-vis debit cards, before the Dodd-Frankenstein law? I just told you how.
Then, Dodd-Frankenstein dictated, by law, a different arrangement between the banks and the retailers - voiding their contractural agreements - cutting the fees the retailers were paying, reducing the revenue the banks received. Now, the debit-card holders will make-up for that revenue loss by incurring higher debit-card fees on ATM transactions at ATM machines of banks that are not theirs.
Or, maybe you meant (how did the banks earn revenue) before, when the Federal Reserve was setting the prime interest rates at 3,4,and 5%, and your (or the banks) “money market” account earnings were exceeding the rate of inflation? I think the facts in the question provide your answer to the question. The banks used to earn revenue the same way your old money market account used to earn revenue - they were paid a higher interest rate on money they had on deposit themselves. We all did. The Fed’s easy money, cheap dollar money manipulations ended that - and bit into a lot of banks and retirees fixed income streams in the process.
The only thing the banks have done is respond to what the Dodd-Frankenstein legislation did to other areas of the banks earnings.
Congress warned the Federal Reserve to warn the banks they needed to preserve more earnings and build more capital reserves, then Dodd-Frankenstein said: “let’s go take away some of their earnings”.
Having helped to create the situation, the crafters of Dodd-Frankenstein, like Dick Durbin, now want to gin up populist angst against the banks for a situation that Dodd-Frankenstein helped create.