In analyzing the controversial topic of pricing ATM usage, it might be valuable first to look at the public's response to bank offers and pricing in other areas.

For if the public thinks something is not a bargain, even though the bank does, it won't fly. And conversely, if the public likes it, that's all that matters.

My best example of this was in Boston about two decades ago, when Provident Savings Bank paid 4 1/8% on savings while most of the others paid 4 1/4%. Yet Provident was the fastest-growing savings bank in town.

All we could conclude was that Bostonians felt 4 1/8 was higher than 4 1/4, so they would come into the other banks and ask, "When are you going up to 4 1/8 like Provident?"

Similarly, people often will be willing to pay a lump sum for a package account that includes several services, even though it would be cheaper to pay for each service by itself. But since they prefer the lump payment to being nickel-and-dimed, they and the bank are both happier.

Another example:

I was visiting a foreign exchange desk and was listening to the customers calling in for quotes on the British pound.

"What are pounds?" the first caller asked.

Seven and an eighth, was the response. (Only the last digits are quoted, to save time, since all participants know what is meant. (Pounds were $1.37 and 1/8 that day.)

Next caller: "What's pounds?" Answer: "7 1/8."

Next: "Pounds?" "7 1/8."

Next caller: "What's pounds?" Answer: "9 flat."

Next: "Pounds?" "7 1/8."

"Whoa!" I cried after the trader hung up. "Why are pounds 7 1/8 for everyone else but 9 flat for that one caller?"

"Ah, he thinks he is chiseling us. Everyone else pays immediately with fed funds, and he writes an out-of-town check, taking us two days extra to get our money. So we get paid in the rate to compensate, and he thinks he is putting one over on us."

Again-if you think it's a bargain, it's a bargain, even though the extra 1 7/8 cents he paid per pound covered far more than the two days' float.

We also have examples on the other side, where the company feels it is giving something away yet the customer feels he has been cheated.

Our best example is frequent-flier miles. The airlines feel they make friends, but the customers find the miles so hard to redeem that the airlines make more enemies than friends.

A banking example where the public's perception of what is good differs from the bank's is in the promotion of account switches, in which the soliciting bank talks about rates and service charges, while many customers think only, "I paid to buy 100 checks on my present bank and have 83 left. If I move my account I have to throw these out, so I won't move."

Bankers who agree and have offered to "buy in" their prospects' blank checks on the former bank (maybe with a 2-for-1 offer of new checks for old) find this little expense often wins more friends than the more expensive enticements.

What makes this relevant today is the furor among consumers and lawmakers alike over double-charging for the use of a foreign ATM machine.

Apparently people would rather pay their home bank $2 to use a foreign ATM than pay a $1 fee to their home bank for using another bank's ATM and then another $1 at the ATM to the bank owning the machine.

This is a key issue for community banks. One of the few advantages a larger bank has is an ATM card usable without charge at any of its multistate locations; a community bank's free usage applies only to its own local ATMs.

Some bankers associations are trying to resolve this through a cooperative of community banks, which lets depositors at all member banks use the others' ATM machines for free. This can be a major defense against the larger banks' giant ATM networks.

The key will be if the public likes this. If people don't think it is a bargain, it isn't.

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