ATM&Debit News

A significant number of consumer account holders may be willing to switch to banks with conveniently located automated teller machines to avoid paying surcharge fees, according to a survey that is expected to be released Oct. 31 by Synergistics Research Corp.

About 67% of consumers prefer to use their own banks' ATMs to avoid paying fees, the Atlanta research company said.

Of these, about 6% would change banks to avoid paying fees altogether. The people who would switch banks to avoid higher fees were customers of financial companies that lack convenient ATM locations, which forces customers to use competitors' ATMs that are more conveniently located, according to William McCracken, Synergistics' chief executive.

"Now that increases are coming, they are saying, 'this is too much,' and are going to make a switch," Mr. McCracken said.

More than half the consumers in the survey use other banks' ATMs when necessary.

Bank of America Corp.'s recent ATM surcharge increase to $3, from $2, inspired surcharge-related questions in Synergistics' online survey of more than 1,000 people, Mr. McCracken said. The survey was done in August.

Christopher Deville, the finance executive for checking and debit at Bank of America, said this month at SourceMedia's ATM, Debit, and Prepaid Forum conference in Carlsbad, Calif., that the latest surcharge increase was aimed at persuading people to open accounts in the Charlotte banking company's branches so they could avoid paying the higher ATM surcharge.

Bank of America, which operates the largest bank-owned ATM network, with 18,633 machines according to the 2008 edition of the ATM&Debit News EFT Data Book, has not measured whether more accounts have been opened in response to the higher ATM fee because the new rate is too new, Mr. Deville said.

Bank of America in August imposed the surcharge-fee increase in most parts of the country, except Chicago.

Other banking companies have followed suit. In August, U.S. Bancorp raised its surcharge to $3 on about 300 ATMs in California; the Minneapolis banking company said the hike was a direct response to Bank of America.

Also in August, Wachovia Corp. in Charlotte increased its surcharge to $3 at 200 East Coast ATMs. Wachovia also said that Bank of America's fee hike was a factor in its decision to raise its own ATM fee.

Raising surcharges "is a roundabout strategy," Mr. McCracken said. "Either that individual is going to pay the higher fee or will switch to the bank charging it" to avoid the fee.

Any of the largest banking companies has the potential to acquire as customers those people who do not want to pay foreign-ATM fees and are ready to switch to a new financial company, Mr. McCracken added.

The average ATM surcharge this year has increased to $1.78, up from $1.64 in 2006, according to data from Bankrate.com, the North Palm Beach, Fla., Web site that tracks consumer banking information.

Synergistics' study outlines a trend toward higher ATM fees. Forty-three financial companies in the survey had raised their fees in the past year, while only three had reduced their fees for noncustomers.

Also, 22 companies are now charging more than $2, and 99% of the surveyed banks that have ATMs charge noncustomers who use them, according to Bankrate.com.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.