The Iowa league is estimating that this state's banks have pocketed an additional $10 million off Iowans who accessed their cash through automated teller machines (ATMs) during the year since ATM surcharging has been permitted in Iowa. Banks in Iowa also charge more per transaction than in other states, the league said.
ATM surcharging returned to Iowa following a lawsuit by five national banks that argued a state prohibition on ATM surcharges did not apply to them. The court ruled in favor of the national banks in March 2002.
"Since that time, banks have added an estimated $10 million in new fee revenue through ATM surcharges, based on transaction figures from SHAZAM, the central routing unit for all Iowa ATM transactions," the league said. "SHAZAM reports that the total dollar volume of Iowa ATM surcharges during the first six months of 2003 was $4,805,275, generated from 3,247,951 surcharged transactions. Annualized, the total surcharge revenue gained by banks would reach nearly $10 million. Second-quarter 2003 figures alone show more than $2.6 million was generated in surcharge revenue."
Well Ahead of Inflation
The data indicate that the average ATM surcharge in Iowa is $1.48. The national average surcharge was $1.36 last year, compared to $1.32 in 2001, stated the Federal Reserve in its June annual report on retail bank fees. From 1997 to 2002 the fees increased 22.5%, well ahead of the rate of consumer inflation.
"Banks call ATM fees 'convenience fees,' and now we understand why. After suing to surcharge at their ATMs, banks have conveniently taken $10 million from Iowans and recently added another $500,000 by refusing to pay taxes on that profit," said Patrick S. Jury, Iowa Credit Union League vice president.
Iowa's credit unions have launched "Be Card Smart," a consumer education campaign that offers advice on how to avoid unnecessary surcharges.
Meanwhile, the Iowa league is also noting that in addition to the $10 million gained by Iowa banks, the industry also successfully lobbied during the 2003 legislative session to permanently exempt ATM surcharge revenue from state sales tax.
"Banks' recent actions have sent a clear message of how much they truly care about our state," said Jury. "The millions of dollars banks have gained from ATM surcharging would be much better spent in the pockets of Iowans and their local communities, instead of big bank shareholders."