At the behest of a local bank, several credit unions and banks have banded together to offer consumers a means of avoiding ATM surcharges, now that the surcharge ban has fallen in Iowa, the last state to eliminate such a ban.
Dupaco Community CU, DuTrac Community CU and Health Services CU have teamed up with american Trust & Savings Bank, East Dubuque Savings Bank, Liberty Bank and Premier Bank to offer a selective surcharging network that gives consumers the opportunity to nix the surcharges that have been allowed in Iowa only since March 18, when the ban on surcharges was removed.
"Nobody wants to be the bad guy," said Gregg Liddle, EVP of $250-million Dupaco Community. "It's not often that banks and credit unions work together like this. But no one knows what's going on, so everyone's trying to take the pulse of everyone else. Everyone's asking, 'so what are you going to do? What are you hearing?'"
The banks involved in the "Privileged Status" selective surcharge network are local community banks. US Bank and one local community bank have chosen not to participate and are charging $2 and $1.50 respectively.
"You can imagine that US Bank doesn't have a very good image around here right now," Liddle suggested. But even the credit unions have struggled with the new surcharging landscape. Dupaco has 13 ATMs, five of which are off site. "Of those, one is at the local community college, and we're not surcharging there. But the other locations are at retail establishments, and the retailers want us to surcharge because they want a share of that. They realize they will lose some transactions if they're not part of the Privileged Status network, but they believe there will still be enough foreign transactions there for them to make money off of. It's tough because we don't have any numbers to show how much business is lost when you surcharge."
DuTrac Community CU has had a much different experience, so far. "We have only three ATMs outside of our own premises, and we are not surcharging anyone at any of those machines," said Tom Sarvis, CEO of the $225-million CU. "We have heard that retailers want the ATMs to surcharge so they can get a piece of the action, but we've actually had two retailers come to us and ask us if we would put a ATM in their shops, but only if it's surcharge-free. We're considering it."
DuTrac isn't surcharging at any of its machines, but that doesn't mean that will always be the case.
"Since the other institutions started surcharging, we have seen a significant increase in traffic at our ATMs. In fact, it's difficult for us to keep the ATMs filled over the weekend, so we have had to replenish them more rapidly and more frequently, and since we don't service the ATMs ourselves, that's a cost that is going to continue to grow over time," Sarvis commented. "We have made no hard and fast decisions either way on surcharging. As long as we can continue to maintain our ATMs without a surcharge, we will, but we will have to see what happens as time marches on."
As for Health Services CU, which fell just $635 short of reaching the $10-million mark last week, there is only one ATM where this could have been an issue-but that's exactly why being part of the network is so important, according to CEO Joe Gonzalez. "We have just the one ATM at the hospital where we are located, so for us, it would have been devastating if our members were going to be surcharged everywhere else they went," he commented. "We're glad we were included."
The consortium of Dubuque banks and credit unions is advertising the Privileged Status network in local newspapers, and are using their own newsletters and statement inserts to educate their own customers or members.
"It's positive PR for all of us," Gonzalez noted. "Everyone has a different feeling about surcharging, but I know a lot of people feel like ATMs have been around a long time, and we did just fine without surcharging. Some people perceive (surcharging) as just pure greed because no one's gone out of business because of an ATM."
