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ATMs (Automated Teller Machines) are tremendous cost savers for banks, but they are often costly for consumers. ATMs have become increasingly prevalent in New York State over the past several years and bank customers have adapted to the new world of banking and become accustomed to using their ATM cards. Banks (who own most but not all ATMs) encourage consumers to use ATMs. ATMs have also become an anti-competitive tool used by large banks with extensive ATM networks to drive depositors from small banks and credit unions to avoid high fees.
On April 1, 1996, the two largest Automated Teller Machine (ATM) switching networks, Visa's Plus and MasterCard's Cirrus, followed the lead of several regional ATM networks and ended their prohibition against member banks surcharging non-accountholders using their ATMs. This cruel April Fool's joke allows banks to charge consumers twice to use an ATM only once. The surcharge is in addition to the "off-us" or foreign fees most banks also charge their accountholders to use another's ATM. The statewide survey included in this report documents current surcharging practices and rates, a range of foreign fees including withdrawals from a foreign ATM and fees for checking account information at a foreign ATM, ATM card replacement fees and debit card, point-of-sale fees.
2002 SURVEY FINDINGS:
In a survey of 106 bank-owned ATMs in New York State conducted in March and April 2002:
- Almost all (97%) assessed surcharges on non-accountholders and the average fee assessed by ATMs surveyed that surcharge is $1.49.
- 42% of the ATMs surveyed that surcharge use their surcharge disclosures to advertise their banks and encourage ATM users to "switch to their bank to avoid fees."
The 106 ATMs included in the survey were owned by 49 different banks:
- 88% of the banks surveyed assessed a foreign withdrawal fee and the average foreign withdrawal fee is $1.20.
- 65% of the banks surveyed assessed a fee to check account information at a foreign ATM and the average amount assessed is $1.03.
- 65% of the banks surveyed charge an ATM card replacement fee and the average fee assessed is $5.75.
- Finally, 57% of the banks surveyed charge a debit card point-of-sale fee and the average fee charged is 89¢.
These findings are particularly disturbing because ATM surcharges and other excessive ATM fees are unnecessary for the ATM owners who assess them and unfair to the consumers who pay them. ATM surcharges are unnecessary in light of the fact that ATMs save banks (who own most but not all ATMs) money compared to expensive teller transactions. Moreover, bank profits have been way up in recent years with 2001 - despite the recession and the September 11th attacks - seeing commercial banks earn a record $74.6 billion nationally.
ATM surcharges are particularly unfair to consumers because the typical consumer pays and the ATM owner collects two fees. The consumer's two fees are: the foreign ATM withdrawal fee their own bank charges them to use another bank's (or non-bank ATM owner's) ATM; and the surcharge assessed by the ATM owner and deducted from the consumer's account at the time of the transaction. The ATM owner then collects two fees for one ATM transaction: the first fee comes from the ATM user's bank, via the network used, and the second fee is the surcharge, which is withheld by the ATM owner at the time the transaction is completed. Congress should pass pro-consumer legislation that would ban ATM surcharges and otherwise make banking and using ATMs more affordable for all consumers. Moreover, New York State and local governments should refuse to place deposits or provide tax breaks and other subsidies to banks that surcharge.
SELECTED MEDIA COVERAGE