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ATM charges: a high price for convenience

29th March 2005
By BBR Staff Writer

A UK government committee is widely expected to recommend changes to the way in which independent ATM operators charge consumers to withdraw money. However, while there some issues around the provision of free banking services to the financially disadvantaged, independent ATMs offer greater convenience for consumers, thereby justifying a charging system.

A number of recent news reports have highlighted the work of the Treasury Select Committee (TSC) in investigating the growing issue of fee-charging ATMs owned by independent operators. These so-called IADs (Independent ATM Deployers) appear in a number of 'convenient' locations such as post offices, shops, pubs and service stations.

Consumer groups have rightly argued that charging fixed fees for the withdrawal of funds places a disproportionate burden on lower income groups. However the banking industry has made a clear case for the existence of fee charging ATMs by saying that they offer an additional service to that provided by the bank-owned fee-free network.

An examination of ATM numbers supports this view. According to APACS, there were 27,400 bank or building society owned ATMs in the UK in 1999 and no independently owned machines. By 2003, there were over 32,000 bank-owned and 14,400 ATMs owned by IADs. Clearly, the overall picture is one of increased choice for consumers in where they withdraw their money, with consumers being asked to pay for ATM services in more convenient locations.

However, this says little about the location of either the new fee-free machines, or the charging ATMs. Consumer groups have argued that the growth in bank-owned machines has occurred in existing branches, while some remote locations have become entirely served by fee-charging ATMs. Clearly there is an issue of access to basic banking services here. The issue of price transparency is also an important one, and again, something that the TSC will recommend that the industry look to correct.

Ultimately, the deployment of fee-charging ATMs to more convenient locations is of benefit to consumers, and there is no reason why they should not be asked to pay for this service. However, where consumers are disadvantaged by the location or price transparency of these machines, then the regulators are right to intervene to protect consumers and ensure that the market works efficiently.

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