As several banks test consumer response to higher ATM fees, the evidence is growing that financial institutions are getting bolder about exploring new sources of revenue as other channels threaten to dry up.
JPMorgan Chase & Co., for example, is testing a new $5 surcharge fee assessed to noncustomers withdrawing money from its ATMs in Illinois; the bank is conducting a similar test of a $4 fee in Texas.
Chase declined to comment on the test, which would represent a significant jump from the $3 fee Chase and most banks charge noncustomers withdrawing money from their ATMs.
Chase is not alone in experimenting with new fees for various services. TD Bank Financial Group and PNC Financial Services Group Inc. recently announced that their customers will have to pay a foreign-ATM fee when withdrawing cash from other banks’ ATMs. TD Bank previously provided its customers free access to other banks’ machines, and PNC reimbursed certain customers when they used other deployers’ ATMs.
Bank of America Corp. executives in 2010 said the bank this year would roll out a “new account structure” that included new fees for basic services. BofA said it was testing an “emergency cash” option that generates a $35 charge when customers exceed their balances when withdrawing cash from BofA ATMs (
More banks may introduce new fees for basic services to offset revenues that could be lost if the Federal Reserve Board’s proposed cap on debit card interchange remains unchanged and takes effect as planned in July, observers say. The proposed rule, part of the so-called Durbin amendment within the Dodd-Frank Act passed last year, would cap debit interchange fees at no more than 12 cents per transaction.
The price-cap has met stiff resistance from banks, and lawmakers on March 15 introduced legislation that would postpone the final rule’s planned implementation to 2012 or later (
More banks increasing ATM fees would not help ATM independent sales organizations, already squeezed by declining ATM use and shrinking ATM interchange revenue, Bryan Bauer, president of Bloomington, Ill.-based ISO Kahuna ATM Services, tells PaymentsSource.
Higher bank-imposed ATM fees for noncustomers are unlikely to trickle through to ATM ISOs, and such fees ultimately would dampen ATM use, Bauer suggests. “Cardholders would not pay (such high fees), and ATM volumes would plummet,” he contends.
But ATM ISOs are eager to see at least one aspect of the Durbin amendment pertaining to network-routing rules to stay unchanged (
Besides capping debit interchange, the amendment would require merchants and acquirers to choose from between at least two different card networks for routing payments. That provision would enable ATM ISOs to choose from among more payment networks, some of which might provide for higher interchange and charge lower fees.
“Right now, ISOs, as transaction acquirers, are at the complete mercy of the networks,” Bauer says. “Having the ability to choose from at least two unaffiliated networks is at least a move in the right direction.”
The legislation introduced this week seeks to delay implementation of all aspects of the Durbin amendment.
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