dispelling a cloud over one of the electronic banking industry's enduring controversies. As of next April 1, owners of ATMs in Visa's Plus network will be free to charge cardholders a direct-transaction fee, over and above any bank-to- bank interchange costs or those that appear on the customer's account statement. In their desire to manage network economics, Visa and MasterCard had long resisted the surcharges, typically $1 or more, that some ATM operators claim are necessary to maintain machines in tourism-oriented locations. Smaller banks, concerned about the costs imposed on their cardholders, supported the fee ban. But the momentum has turned. Many states have enacted laws preempting the surcharge bans, small banks are less vocal in opposition, and MasterCard is considering following Visa's lead with a formal change to its Cirrus network rules.

"Certain of our member institutions cannot make the business case for ATMs in locations like convention centers, hotels, ski resorts, and theme parks without the right to charge a small fee," said Susan Forman, a Visa spokeswoman. She said the association essentially "bowed to the inevitable," since 14 states already have overridden the Visa ban and others are expected to follow. Community banks, which have a greater stake in ATM card issuance than machine ownership, also have adapted to the changed climate. "They are vulnerable to predatory pricing schemes because of that lack of ownership," said Linda Echard, president and chief executive officer of IBAA Bancard Inc., an affiliate of the Independent Bankers Association of America. "But they face that predatory pricing even today. The reality is that if the cost outweighs the convenience, consumers will find another place to go." Meanwhile, banks in general are paying more attention to fee-earning opportunities and they say additional revenues will be critical as they deploy more machines away from bank premises. Off-premises ATMs generally are more expensive to maintain than branch units. What's more, consumer research shows that people are willing to pay for the convenience of cash withdrawals at travel destinations like airports, hotels, and theme parks. Three-fourths of consumers would pay at least $1, and six in 10 would pay $2 in these places, according to a survey by Synergistics Research Corp., Atlanta. The Visa U.S.A. board decided not to set a maxeimum allowable fee, with the expectation that market forces will keep the fees low and competitive. "It is not in any bank's interest to charge a $5 fee," said the Visa spokeswoman. She said the assumption is that surcharges will range between 25 cents and $2.50. "Most consumers do not object to the convenience and service that comes with having the card and thus do not object to issuer charges associated with the card," said James Brown, a Milwaukee-based consumer advocate and expert in electronic banking who has been consulted by the Tyme regional ATM network. "An acquirer (machine-owner) surcharge is different, and I suspect there will be consumers who will object, resent, or be outraged by this charge," said Mr. Brown, who is president of the Wisconsin Consumers League. The Visa U.S.A. board, which approved the measure last month, is delaying the start date to give card association officials time to revise operating regulations. For example, Visa has written a nondiscriminatory provision into the surcharging rule. No Visa-Plus customer can be charged more than any other network's customer using the same machine. Visa is also requiring member banks to disclose to customers that they will be charged a fee and give them the right to cancel the transaction before the fee is imposed. Any Visa member bank that wants to surcharge must notify Visa in writing and must submit copies of their disclosure displays for approval. "I think that disclosure is a minimal step in fairness to consumers," said Mr. Brown. "Yet I suspect some acquiring institutions will abuse the surcharge privilege." Some experts suggest Visa's action, along with the lowered resistance from community bankers, will lead MasterCard and its Cirrus network to follow suit. A MasterCard spokeswoman said its board is reviewing the surcharge ban but no change has yet taken place.

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