The debate over automated teller machine surcharges shows no signs of abating.
The U.S. Public Interest Research Group issued its annual ATM-fee survey results April 1, using rhetoric inflammatory to banks and sparking a new round of denials and defenses from the industry.
"Banks need the money-that's the biggest joke going," said Edmund Mierzwinski, the group's consumer program director. "Consumers aren't fooled by that. Banks are charging these fees simply because they can get away with it."
Stan Paur, president and chief executive officer of Pulse EFT Association, the Houston-based electronic funds transfer network, hit back at what he called a "misleading case."
The consumer group "attempts to leave the impression that increasingly people are being ripped off helplessly by ATMs," Mr. Paur said. "The truth is that more and more consumers are getting cash from their bank accounts for no cost, while the number of ATMs available has expanded dramatically for those consumers who are willing to pay for convenience."
Such bickering has been going on since Visa U.S.A. and MasterCard International lifted their bans on the surcharges two years ago. Senate Banking Committee Chairman Alfonse M. D'Amato has stoked the fire with denunciations of surcharging and with legislation to do away with it.
The consumer group's latest report, citing data from 470 banks in 28 states, called surcharging a "serious threat" to smaller banks and credit unions. The group also accused ATM owners of enriching themselves in two ways, through interchange fees plus surcharges.
Surcharges ultimately will give bigger banks more power, because depositors will tend to leave smaller institutions that lack substantial free ATM networks, the group said.
Pulse's Mr. Paur challenged the claim. "In 1997, we did consumer research-we asked consumers if they have every changed banks because of convenience fees," he said. "We found that less than 2% switched banks."
Ernest Burdette, president of Triton Systems Inc., a maker of the new wave of compact ATMs at convenience stores and other nonbank sites, defended the way machine owners are boosting their revenues through two income streams. He compared it with long-distance calling services that include access fees to toll charges.
The battle is playing out in microcosm in Massachusetts. The biggest banks, Fleet Financial Group and BankBoston Corp., have refrained from surcharging so as not to alienate legislators who are debating a ban on the fees.
A recent poll by the Community Bank League of New England said 33% of community bank ATM users would likely switch to a larger bank with more ATMs, rather than pay surcharges.
The Massachusetts Bankers Association previously had released a study saying that "surcharges are unlikely to have a significant impact on the market share of community banks."
The American Bankers Association said it was only to be expected that the consumer group would find more banks charging ATM fees, since they were first allowed to do so only two years ago.
And John Charles Bradbury, who recently wrote a surcharge briefing paper for the Cato Institute, a conservative Washington think tank, had harsher words for the consumer advocates. "The statistical rigor of this study is at the level of a junior high science project."
Mr. Paur dismissed the consumer group's report as a pesky but inevitable April event, like the income tax deadline. Despite the objections, he said, surcharges are here to stay.
"With the majority of ATMs being purchased by nonbanks, my guess is that these fees would be an element of ATM usage as we move forward," said Mr. Paur. The executive also said consumers have other options, including getting extra cash when they use debit cards at the point of sale.
