The debate over whether a fee or tax is progressive or regressive comes down to how it impacts those that pay, and who ends up paying more frequently. On the surface, many of us agree that paying for convenience is part and parcel of the ATM surcharge, but when we peal back a few layers of the issue it is explained more as a cost sharing issue.
ATM fees aren’t rising due to overwhelming demand. In fact, it’s the opposite. “It keeps getting easier to avoid the fees, and people are transitioning away from cash,” said Greg McBride, Bankrate.com’s chief financial analyst. “With fewer people making out-of-network ATM withdrawals, the cost of maintaining that network is being spread over fewer transactions.”
The report looked at the 10 biggest banks in the top 25 major metro areas to find out where average ATM fee surcharges are the steepest and where they are … slightly less steep. Pittsburgh experienced the highest average fees, with customers paying $5.19 when Bankrate.com combined the fees charged by the ATM operator with fees from the consumer’s own financial institution. The lowest average fees were found in Dallas, at $4.07.
Customers with higher account balances or multiple relationships with their bank—as in a checking account, a mortgage and a personal loan, for example—may avoid out-of-network ATM charges from their bank or be reimbursed for some of them.
The implication is that those consumers with lower account balances, or only one account with an FI are where the real cost of maintaining the ATM is being extracted, and these may be the least able to absorb the fee, and are more likely to have limited choice in their neighborhood, or limited access to transportation. Addressing the issue of the unbanked and the underbanked will certainly need to take on the provisioning of accountholders with reasonable access to cash, or the efforts to bring more Americans into the ranks of the fully banked will stall.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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