Australian banks will continue to make money by charging customers more than they need to for using other bank’s ATM machines, despite changes designed to stop the practice.
From tomorrow, ‘interchange’ fees – the fee an ATM owner charges a bank for a customer transaction – will be abolished, allowing ATM owners to charge customers directly for the use of the machine if they disclose the fee up front.
According to Reserve Bank governor Glenn Stevens, the maximum cost to a bank of electronically processing a transaction done at another bank’s, or ‘foreign’, ATM is 10 cents, but most banks will still charge customers many times that.
“We cannot see any strong case for ‘foreign fees’,” Stevens said recently.
National Australia Bank has said it will charge 50 cents per transaction, Westpac and St George will charge 25 cents.
Commonwealth Bank and ANZ, however, will stop charging fees for using other ATMs and 115 credit unions and building societies have abolished the $2 fee they previously charged for foreign ATM use and will offer free access to 1400 ATMs.
However, if a bank has abolished foreign ATM fees it’s likely that will be recouped via other fees on a customer account. Banking insiders said that banks frequently offset lower fees on some account transactions, with higher fees on others.
While some customers will benefit from tomorrow’s changes, non-bank ATM operators – covering ATMs in locations like pubs, petrol stations and airports – will continue to charge a fee of around $2. However, under the new rules, banks cannot limit what the ATM owner charges the ATM user.
The banks own around 43 percent of Australia’s 26,000 ATMs.
According to Stevens, the cost per transaction for running an ATM is around 75 cents.
“It is true that it costs money to run an ATM. I think it is 75 cents a transaction. It does cost the owner money to run it and someone has to pay that,” he said.
Banks in many industrialised countries, including Ireland, the UK, Austria, Hong Kong and the Netherlands, do not charge customers for using other bank’s ATMs.
A public backlash in the UK over plans to charge fees resulted in customer ATM fees being removed all together in 1999. Now, each time a customer uses a rival bank’s ATM the bank covers the asscociated fee.
The Australian Bankers Association said customers should contact their bank for help in locating ATMs to minimise charges.
What happens tomorrow?
From tomorrow, if you use an ATM that is not owned by your bank the fee you are about to be charged will be displayed. You can the decide whether to pay the fee or cancel the transaction and use another ATM.
The fee will appear on your statement broken out into the fee charged by your bank and the fee charged by the ATM owner.
money.ninemsn 2 Mar 2009