ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, April 25, 1996 TAG: 9604250046
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Hearst Newspapers
Bankers told Congress on Wednesday that higher fees are needed to pay for the ATM expansion binge that has placed cash machines in convenience stores, on ski slopes and at football stadiums.
But lawmakers at the hearing before the House Banking subcommittee on consumer credit were skeptical that the banks had made a solid case for higher fees.
House Banking Committee Chairman James Leach, R-Iowa., said the new fees are eroding consumer confidence in the banking system.
``Customers are feeling the surcharges are beyond their control,'' he said. ``In the meantime, I think it would be wise for industry to take a step back and put a voluntary freeze on any surcharges.''
Financial institutions charge their customers an average of 95 cents per transaction for using another bank's machine. As of April 1, the bank that owns the ATM also can charge an additional fee as high as $2.50 per transaction.
The result: People now may pay twice for using an ATM once.
While few banks have begun charging the new fee, the potential increase in fees has outraged consumer advocates and prompted calls for laws to ban the higher fee or require that a customer be notified of all fees when using an ATM.
Most ATMs warn users of their new surcharge, but not of the customer's bank's fee. Users aren't informed of their own bank's charge until their next monthly statement.
Paul Allen, executive vice president of credit card giant Visa U.S.A. Inc., which has branched into the ATM business, told the panel that the surcharges pay for the expansion of ATMs from their traditional location at banks to supermarkets, airports and convenience stores, and from cities to rural areas.
``The monthly rent an ATM operator must pay in premier tourist sites such as theme parks and airports can be thousands of dollars,'' Allen said.
Rep. Maxine Waters, D-Calif., said the banking industry had a record $48.8 billion profit last year, up 50 percent from two years earlier. ATMs alone generated $2.2 billion in profit, she said.
``Bank fees reflect mark-ups on cost of as much as 900 percent,'' she said.
Bank officials disputed her figures.
LENGTH: Medium: 53 lines ILLUSTRATION: GRAPHIC: Charts by AP. 1. Number of ATMs. 2. Number of ATMby CNBtransactions.