ATM Fees-Banks' Perspective
We've all heard the complaints that financial institutions are "laughing all the way to the bank" with their record profits from ATM fees and surcharges.
Part of the issue concerns perspective. Customers view the charges as leverage banks use to force consumers to pay for access to their own money. Banks view the ATM service as a benefit they've chosen to provide for a fee, and feel justified in attempting to recoup the costs of their customers' transactions at "foreign" ATMs. Basically, the financial institutions view the convenience of ATMs as a privilege while consumers feel access is a right, especially since some banks charge to see a human teller.
It is estimated that each time a bank's customer uses another institution's ATM it costs the bank between $.50 and $.70. Typically, this fee is a combination of three charges the bank incurs:
1. Payment to the bank which owns the ATM, usually $.30-$.40. This is the part which has prompted legislation by the Senate Banking Committee. (For details, visit senator D'Amato's web page at http://www.senate.gov/~damato/atm.htm.
2. Payment to the network for coordinating the transaction. In the northeast it has been reported to be $.04-$.08. For the PULSE network, it has been reported to be $.75 per transaction. But, Cirrus and Plus (the nation's two largest ATM networks) recently told the Senate it is individual institutions, not their networks, who are to blame for the surcharges. According to Tony McEwen, director and EVP of Plus, "Plus has no role whatsoever in setting ATM card fees or ATM access fees. ATM access fees provide no financial benefit to Plus since the company derives no revenue from such fees." On the same note, Cirrus president Henry Mundt said, "Any fees imposed on consumers in connection with ATM services are determined and imposed by the financial institution participation in the network, not Cirrus."
3. Payment to a company to track the ATM transactions, usually $.10.
At best, this only adds up to 60% of the fees most banks charge and still some banks are claiming they aren't breaking even. Why? Because the fees have been considered from the standpoint of a consumer using a foreign machine. But, the bank still has to pay for the upkeep of their own machines.
For example, OmniBank in Texas placed five ATM machines (costing $50,000 each) in convenience stores. Given that it costs $600 per week to service the machines, each ATM would have to process 1500-2000 transactions each week to break even. They claim it hasn't happened.
If the banks and other financial institutions had thought through ATMs in the beginning, they probably would have charged fees from the outset. But they did not and now they're in the position of having to justify their charges to consumers who feel they are being swindled.
