The Foreign-Fee Feast

  For bank ATM owners, the fee that's seeing the biggest increase is the one assessed to cardholders for using another bank's machine.
  Debit card issuers over the past year were more inclined to raise so-called foreign fees charged for using other banks' automated teller machines than they were for customers' other card-related activities, new survey data from CCM sister publication ATM&Debit News suggest.
  Of the 26 financial institutions surveyed, seven raised or altered their foreign-ATM fees over the past year, while just one altered its proprietary ATM fee and two adjusted fees assessed for using personal identification numbers to initiate purchases (chart). In many cases, issuers waive these fees for certain accounts or when customers meet minimum-balance requirements.
  Next year's survey may find considerably more activity, depending on the interchange rates Visa USA and MasterCard International set for their signature-based, or offline, debit cards that take effect Jan. 1. Under their recent settlement in the merchant class-action lawsuit, the associations will lower the interchange merchant banks pay offline debit issuers by about one-third between Aug. 1 and Dec. 31. They have not announced what their rates will be starting in 2004.
  In last year's ATM&Debit News survey, five of the 27 financial institutions polled had started charging customers who used their PINs to initiate purchases, joining six others that already were doing so. Most wanted to encourage the use of signatures instead of PINs because they received more interchange revenue.
  But with the spread narrowing between signature- and PIN-debit interchange, issuers may reassess that strategy. "It's hard to say whether we will reduce the emphasis on signature debit," says Cathy Kauffman, a vice president at Winston-Salem, N.C.-based BB&T Corp."