I don’t mean to hijack your thread here, Sterling, but have you read Al Franken’s “Why Not Me?” It’s an account of his successful campaign for the Presidency, based on one issue that galvanizes the nation:
Whose money is it? Why, the bank’s of course! You give it to them, and they charge you admittance to visit it.
I provide exactly no services to my competitors’ customers. On the off chance that a competitor came to me and asked me to offer its customers some service, I’d charge like crazy for it. I’d also want to market the customers and maybe steal a few.
So I think the consumer groups have it exactly backwards. They should be trying to prevent banks from charging their own customers for withdrawals.
And even that they should be doing on the state level, where banks are already regulated. Municipal-level regulation of global industries is not a good idea. A patchwork of regulations like that can only serve to increase the overall costs of delivering services and cause customer confusion.
All that said, large banks blocking competitors’ customers’ cards may in the long run serve to increase concentration in the banking industry. Perhaps antitrust regulators should work ATM machines and transactions into the definition of market share when deciding whether to approve mergers.
Ya’ know manhattan, I didn’t think about that.
I bank with a bank that gives free access to their ATMs. In that reguard, there should be no toll on ATM (or any type of withdrawl)
Basically I age with your take on the issue (title: … it['s] not YOUR money).
Example: Can you walk into “Prime Fidelity Bank” and expect them to be able to access your account from “Dan Akroyd Bank.”
Furhtermore, what does this law say about those “third party” ATMs that abound at convience stations and bars? If those are no longer allowed to charge access fees, they will disappear. People don’t build and service the damn things out of the goodness of thier hearts. Didn’t they think this through in California?
Actually, those “third party” ATMs are still owned by banks. Most of the ones I’ve seen in supermarkets, C-stores, etc., list the name of the ATM owner along with fee notice. SOMEONE has to keep the thing stocked with cash.
What I want to know is, whatever happened to the idea that it is a bank’s PRIVILEGE to hold your money? The big banks seem to have forgotten about this. For every dollar of yours it has virtually interest-free, it can loan out another $10 or so at 8% or more (usually much more) interest. For years the banks made plenty of profit on the spread. Why the gazillions of fees all of a sudden?
Not much to add to what manhattan said, except to say that he’s one of the few who obviously GETS it (not surprising, given what he does for a living). If my money is sitting in Wells Fargo Bank, why should I expect Chase Manhattan to let me take it out of ITS ATM for free?
OTOH, I think the fees that are charged are outrageously high. But that’s a matter for free market competition. I don’t bank where they don’t give me my checks back; when my bank changed to that, I walked. If people walk away from ATMs with high fees, they’ll change, too.
Consider: Bank X decorates all its ATMs with big “No Fees” signs and Bank Y’s customers start using them. Then every time Bank Y screws or ticks off a customer enough that they decide to switch banks, Bank X has an edge over Banks Z and W.
Well, I think its obvious that ATM Fees are not unreasonable at face value. The banks should be able to charge for the service rendered, but the charge must be commensurate with the value of the service provided.
It is completely unrealistic to claim that a $1-$2 service charge is reasonable, considering the minimal output required from the bank. There is virtually no additional labor, equipment, or overhead to providing the service. This charge is pure profit, and is just lining the pockets of the bank. The reason is that the customers have such little choice in which service to use when withdrwing cash. It virtually iliminates the advantage of ATMs if the customer must plan ahead and visit their bank to avoid these charges.
This being said I think the banks have a cartel established, and the mergers are beginning to lead to future monopolies. This being considered, I don’t think that free market competition is enough to regulate the practice. This is a practice that either must be governmentally regulated, standards being set according to the net cost to foreign banks. Or, have guidelines passed to further encourage competition from smaller and new banks. Banking is virtually impossible to break into as an entrapeneur (sp?), and I wonder what the federal guidelines state, and if they are restrictive to new competition.
ATM machines are of this generation. They are a convenience! They save you a trip that your Mom or Dad had to make to the bank. And the people who operate ATM machines have determined the maximimum amount folks will pay vs. annoyance level with fees.
As long as the majority accepts the fees and uses the machines…well, it’s a free market.
When people–large groups of people-- actually stop accessing ATMs will Adam Smith’s “invisible hand” start to lower those fees.
There’s a one-word answer: disintermediation, which is defined as the “movement of funds from low-yielding accounts at traditional banking institutions to higher-yielding investments in the general market” (Barron’s Dictionary of Finance and Investment Terms). More and more consumers are getting smart and putting their money directly in the money market rather than going through a middleman like a bank (the “intermediate” in the term “disintermediation”). So now banks don’t have as much money on which to make that spread, and they have to get sneaky and lay on all sorts of charges and fees to offset the decline in this source of revenues.
ATM’s will soon start to decline in use. My ATM card now has a VISA logo on it and I can use it anywhere that takes credit cards, with no added fees. Since just about the whole world accepts VISA, my ATM visits have been significantly reduced. As this option becomes more widespread ATM use will decline.
I’ve tried to make some purchases with my checkcard/VISA over the phone, and had some businesses refuse to accept it as payment. (Some were on a deferred billing basis.)
What does it matter to them? If they check the available credit (i.e., my checking balance) the money is there. If I had an outstanding check come in and bounce because I used the VISA, that’s my problem, not theirs.
I thought a lot of the controversy was that consumers were getting charged twice. For example, I bank at Lotsabucks Bank. One day, I withdraw cash from First Moneygrubber’s Bank ATM. My bank charges me $1.50 for using a foreign ATM. The ATM itself charges me $1.50 because I don’t have a First Moneygrubber’s account.
But… Lotsabucks (and most banks, if we’re to believe the propaganda) has the fee set up so that out of the $1.50 they charge me, they give a kickback to the owner of the ATM. The ATM owner has already charged me $1.50 for using their ATM. The consumer groups are saying that this double-fee system is evil.
I’d like to see a study detailing the actual labor charges that banks save by having ATM’s. If an ATM costs $50K (I have no idea how much they cost, I’m making this up) and yearly servicing comes to another $10K per machine, BUT the bank can get away with 1 or 2 fewer actual human tellers, well, it seems like it comes out about even to me.
The issue is not a “fair profit.” Lots of things have disgustingly high profit marigins–McD’d large cokes cost ~17 cents, labor included. That’s over a dollar of pure profit, but we don’t pass a law forcing them to charge less. The banks are allowed to make as much money as they can, and I still think it is okay for Bank A to charge me so that I can get my money out of Bank B. Personally, I think the fees are outragous, and I always go to my own bank if I need cash–in my mind the most elegant solution to the problem.
I wonder why why every one goes after the bank that owns the ATM? It would make more sense to prohibit the fees YOUR bank charges you to get to your money; I can see that since I believe some bank fees similar to that are already regulated.
Somehow, I knew this thread was coming. ::putting on flame retardant undies:: And off we go!
Well, you see, margins (the spread) tend to rise and fall based on a myriad of economic conditions. Shareholders, on the other hand, tend to hold the notion that their investment should continue to rise. Therefore, banks are trying to rely less on margins for profit and more on “per use” fees which tend to be less volatile. Makes perfect business sense, but it is changing the way people are accustomed to dealing with banks, and change tends to get peoples’ dander up.
Izzat so? Remember when ATM’s first came out? They just dispensed cash and weren’t extremely reliable at that. Now you can get cash, make deposits, transfer funds, get balances, print out your statement, and in some cases buy unrelated products like movie tickets and savings bonds. Who do you think pays for all that R&D? How about the networking systems behind the ATM’s (STAR, Plus, CIRRUS, etc.). Who do you think pays to keep those systems up and running? Then there are the people at each bank who support the internal ATM networks (testing, vendor management, dispute resolution, deposit processing, etc). How about the cost of keeping money in the machines? Every dollar that sits in an ATM is a dollar that cannot be invested. Who makes up that difference?
I’m not going to tell you that it costs the bank $1.50 to process an ATM transaction, but then the consumer groups who put the cost at a nickle aren’t adding in the massive support expenses. They have their agenda too, you know.
Nope, not at all. If you could convince enough investors to stake your new bank and hire some folks with banking experience, you could start a bank fairly quickly. Around this part of the country de novo banks spring up like weeds. Start a bank, wait 5-7 years, sell the bank to a bigger bank, pocket the profits, start a new bank. Lots of folks have made a decent fortune following that business model.
Yep, that’s part of it, too. Insurance and investment companies are moving into the turf once held solely by banks. Banks cannot (yet), due to depression era legislation, return the favor. Banks can only make money from banking, and the banking pie is shrinking. Call me naive, but I believe that when Glass Stegall is done away with and banks can get into other financial arenas like insurance, the consumer will benefit.
Maybe, but not anytime soon. ATM use has risen every year since they were introduced. It will continue to do so for the foreseeable future. New technology will come along which will replace ATM’s as we know them, but way down the road. It took banks 20+ years and billions of dollars to build the current ATM network. They ain’t gonna dump it overnight.
I know of no legislation that limits bank, or any other free market business, fees.
Long post, I know, but geez folks. Try walking in to an apartment complex where you don’t live and ask them if you can use one of their apartments for a few minutes. I doubt you get very far.
The overwhelming majority of people have more than the average (mean) number of legs. – E. Grebenik
I think it is a very stupid thing to do, pl. In theory, of course, it’s no different than yield management for an airline. And it’s certainly legal. But it’s generally a mistake to hit consumers squarely in the eyes with a variable pricing strategy like that.
Some variable pricing strategies are relatively easy for consumers to accept (no cover at the club before 10, $10 cover after), and some consumers hate but take it because they have to ($1,300 airline tickets when the leisure traveler next to you paid $300). But for a product as simple (and easily substitutable) as Coke to try to price to something as ephemeral as temperature will probably be seen as an insult. Probably won’t even sell in Atlanta.