ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, May 30, 1996 TAG: 9605300087
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 NATL/INTL EDITION: METRO
SOURCE: Associated Press
NOTE: Below
Until two months ago, Marisa Gonzalez visited an automatic teller machine two or three times a week. Now, she goes just once a week to an ATM at her neighborhood supermarket and makes cash withdrawals stretch. ``They put a sign up saying they wouldn't charge,'' Gonzalez said. ``Now I make it a point to go there.''
For consumers like Gonzalez, who banks at a credit union without its own teller machines, ATM fees have risen from an irritant to a major gripe since April 1, when the two largest ATM networks lifted a ban on surcharges to noncustomers.
Surcharges are extra fees any bank can now levy on transactions done with ATM cards not issued by that bank. They range from 50 cents to $10, and are on top of fees that already were being charged.
After years of aggressive lobbying by banks, Visa Inc.'s Plus system and MasterCard International's Cirrus network removed their long-standing ban on surcharges. Now banks are gearing up to expand their ATM systems, and many are eyeing new ATM fees.
Consumer groups are fighting back. ``It's simply double-dipping. It's a form of profiteering,'' charged Ed Mierzwinski, a consumer advocate at the U.S. Public Interest Research Group.
He said that as banks close branches, ``ATM machines are becoming more of a necessity than a convenience.''
Legislators also are fighting higher ATM fees. Sen. Alfonse D'Amato, R-N.Y., chairman of the Senate Banking Committee, and Rep. Bernard Sanders, I-Vt., have introduced bills to ban the surcharge. Rep. Charles Schumer, D-N.Y., would require banks to notify customers of any surcharge before they complete a transaction, and give them the option of canceling.
The banks contend they're merely recouping the cost of making banking more convenient.
The murky economics of bank ATMs vary radically and are based on information that banks like to keep private.
David Humphrey, a Florida State University finance professor who studied ATMs for the Federal Reserve Bank of Richmond in 1994, estimates the industry's ATM profit margins are about 9 percent. ``Not bad,'' he said, ``but they're not making money hand over fist.''
Few dispute that ATM transactions save banks money. Each one costs about 27 cents, vs. $1.07 for a teller transaction, says the Gemini Consulting firm in Morristown, N.J. Telephone, personal-computer and Internet transactions are even cheaper.
But people use ATMs about twice as much as they formerly used tellers, Humphrey said, offsetting the banks' cost savings.
In 1995, the Federal Reserve found that, counting insurance and servicing costs, big banks - with deposits exceeding $200 million - actually lose an average of $130 a month on every ATM they deploy. Smaller banks lose much more - up to $896.
Whatever the profit range, banks are expanding their ATM reach.
NationsBank plans to increase its ATM network by 60 percent this year. The Charlotte, N.C.-based company planned to do so before Plus and Cirrus lifted their ban, said Cliff Condon, manager of customer access. NationsBank has imposed a $1 surcharge for years in states that allowed it, and will expand the surcharge to all of its ATMs, Condon said.
David Balto, an attorney with the Federal Trade Commission, said bank customers cannot rely on competition to keep surcharges down. ``There is no disincentive on the ATM owner in a remote location to gouge you,'' Balto said, ``just as there is no disincentive for the guy with the roving tow truck to overcharge you when your car breaks down in the middle of the night.''
The charges already have spread from remote locations to busy shopping thoroughfares. ``The banks learn they can charge at any ATM, and they quickly do exactly that,'' Balto said.
In states where surcharges are allowed, they are charged at 80 percent of ATMs, Balto wrote in a recent opinion piece in the American Banker, a trade newspaper.
Surcharges may help big banks recruit new accounts, Balto said. ``If I have to pay 75 cents every time I use one of NationsBank's machines, why wouldn't I just switch my account to NationsBank?''
LENGTH: Medium: 80 linesby CNB