Automated teller machine users in Illinois may soon encounter a new screen during ATM transactions disclosing how much the transaction will cost and giving them the option to terminate it without penalty.
The Illinois treasurer's office, saying it is unreasonable to expect bank customers to sort through complicated ATM fee structures, is backing a bill that would require the state's approximately 4,000 ATMs to impart such information.
The bill, which would also require that the fees charged for a transaction be printed on transaction receipts, failed to pass out of committee on its first vote in early April.
Concern Over Implications
But with legislators vowing to bring the measure to vote again before June, bankers and network executives are growing concerned about the implications of the legislation.
"Trying to build this kind of notification would actually add a considerable amount of costs that would ultimately get passed on to the cardholders," said Tom Tremain, vice president of electronic banking at First Chicago Corp., which owns more than 300 ATM.
"[The legislation] is going to be counterproductive, if part of its purpose is to make [ATM] transactions more cost-effective," he added.
Cash Station, the dominant regional ATM network in Chicago, said the systems changes required by the bill could cost the network and its member institutions between $6 million and $26 miollion.
In addition, banks' recurring costs would rise by an estimated $6 million as a result of the measure's requirement that consumers be allowed to opt out of a transaction after seeing the fee.
Allowing for such an option would be costly because an ATM would have to communicate twice with a cardholder's financial institution during a transaction: once to ascertain the fee and again to fill the consumer's request for cash or account information.
Costs Disputed
Yet despite bankers' opinions to the contrary, the bill's sponsor, Illinois state Rep. Jan Schakowsky, said she believes the measure would reduce the ATM fees charged to consumers.
"Right now in secrecy -- and that's what the banks are operating under now -- there's not any real competition" between financial institutions on the basis of ATM fees, said Ms. Schakowsky.
"People will know that they are actually paying for transactions," she said, "and they may seek out a financial institution that has lower prices."
Ms. Schakowky pointed out that ATM fees have become increasingly more common since the terminals were approved for use in Illinois 14 years ago.
A survey of 300 Illinois financial institutions by the Office of the Illinois Treasurer showed that 76% of financial institutions charge for ATM use today, compared with none charging ATM fees in 1980.
The survey also showed that the most common fee assessed on "foreign" transactions -- in which a cardholder of one bank uses another institution's ATM -- is $1.
Current Illinois and federal laws require financial institutions to disclose the ATM fees a cardholder will pay at the time an ATM-accessible account is opened.
Banks are also required to give 21 days notice on any changes in ATM fees.
Laws Called Outdated
Yet supporters of the onscreen disclosure bill believe these laws have become outdated as ATM fee structures have become more complex.
"Our argument is that customers are bewildered by the various fee scenarios," said Daniel Shomon, a spokesman for the Office of the Illinois Treasurer. "Consumers ought to be able to know what they are paying for something as they incur the expense."
Bankers argue that their customers have enough information under current disclosure requirements to determine the cost of transactions.
Banks Not Contacted on Bill
Further fueling bankers' opposition to the bill is the fact that the financial community was not consulted before the measure was drafted.
"We were never approached by the treasurer's office, never asked, 'How does this work?' or 'What costs does this entail?'" said James Hayes, senior vice president and general counsel at Cash Station Inc., based in Chicago.
Bankers found the treasurer's decision to draft a bill without them curious and insulting, given that the Chicago banking community worked with lawmakers to a positive end on ATM security legislation.
Cooperation Pledged
Nonetheless, the financial community has pledged to cooperate with the treasurer's office.
One of the first tasks the two groups may undertake is a formal survey of the state's six million ATM users.
Meanwhile, bankers will oppose the legislation if it comes to a vote again in its current form.
"I can't think of any middle ground on this," said First Chicago's Mr. Tremain.
Ms. Schakowsky said she plans on bringing the bill to the floor again, possibly as an amendment to a measure other than the state's Electronic Fund Transfer Act.
