A community bank in Chicago is trying to turn automated teller machine surcharging into a good deed.
With some of the country's biggest banks going to courts to defend their rights to surcharge, Mid Town Bank said that for every ATM deposit or withdrawal during the pre-holiday weekend of Dec. 18-19 it would donate 50 cents to local children's charities.
Four organizations collected $2,026 from the $290 million-asset bank, which has four branches and 26 ATMs.
The 50-cent contributions came out of the $1.45 fees paid by customers of other banks. But Mid Town also handed over 50 cents for each of its own customers' transactions. Those transactions were surcharge-free, so the funds came out of the bank's coffers.
"I do think we should be doing something to counteract this negative publicity about ATM charges," marketing director Mary Rickard said of the "Give at the ATM" campaign. "These kinds of community efforts underscore the personal attention that we really want to give our customers."
Consumers have bristled at ATM surcharges since the practice became prevalent in 1996. This fall, organized campaigns against the fees bore fruit when Santa Monica, Calif., and San Francisco enacted bans, leading politicians and consumer advocates to seek similar rules elsewhere. Activists argue that consumers are being gouged because they often pay twice at machines not owned by their own banks: the surcharge to the machine owner and a "foreign ATM fee" to card-issuing institution.
Banks contend that consumers cast a vote every day by choosing which ATMs to use. The surcharge is a payment for convenience, they say, adding that consumers do not expect something for nothing.
"If the ATM is not profitable, nobody is going to go to the expense of putting one out there," said Inge Fryklund, Mid Town's senior vice president of Internet banking.
Mid Town executives say two-thirds of their ATM transactions are typically by noncustomers. About 75% of the charitable donation came from noncustomers.
Ms. Fryklund said her tracking reports show that people will go to the closest ATM, even if their own bank is one only a block away. Consumers get into routines of going to specific locations regardless of machine ownership. They want their cash "right this minute," she said.
Ms. Fryklund said Mid Town still has personal-touch advantages over big banks such as Bank One Corp. - the largest in Chicago. Mid Town has gained customers who "feel that they are victims of the Bank One merger" with First Chicago NBD Corp., she said.
Mid Town is planning to repeat the campaign with additional publicity. Ms. Fryklund said the main idea is to reach out to the community. Any users drawn to the ATMs because of the program, she said, are "frosting on the cake."
Edmund Mierzwinski, consumer program director at U.S. Public Interest Research Group in Washington, called Mid Town's program a "publicity stunt."
"I don't think this makes surcharging more palatable," Mr. Mierzwinski said. "It shows how gross the profits are on surcharging. The bank ought to lower its fees, eliminate double surcharges, and give money to charity anyway."