Stop ATM ‘Double Dipping’
City Council speaker Peter Vallone has come out on the side of New York City consumers who are confronted with outrageous fees for accessing their own money through the automatic teller machines that dot the city. We applaud him.
Automatic teller machines are a great convenience. Not many years ago, the only way to get money out of a bank account was to make a withdrawal during banking hours, usually between 9 a.m. and 3 p.m., Monday through Friday, or write a check to oneself and maintain sufficiently good relations with a neighborhood business so that said check could be cashed.
ATMs changed all this. Suddenly bank customers could get at their money whenever they wanted. At least one television commercial told of a young man confronted with a restaurant bill who excuses himself from his guests and runs to the cash machine on the corner, saving face and making everyone happy. Need cash to go to the grocery store on a Saturday afternoon? No problem. The prescription your doctor phoned to the drug store for your sick child costs more than you expected? Hit the ATM. The things are a godsend.
Banks liked ATMs as much as their customers. Even a part-time teller costs a bank upwards of $15,000 a year in salary alone. According to the federal Office of Thrift Supervision, ATM transactions cost a bank less than 30 cents. The cost to the bank of the same withdrawal if conducted through an interchange between a customer and a living, breathing teller is nearly $3.
However, nothing is perfect, and a fly was soon found in the ointment in the form of fees ranging from 75 cents to upwards of $1.50 for a transaction if a non-bank customer used an ATM. Some banks "double dip": the bank at which the customer has an account, imposes a fee if the customer uses another bank's ATM. Sometimes, too, the network, such as NYCE or Cirrus, over which the transactions are transmitted, also imposes a service fee; this usually shows up as a total of per-transaction fees on a customer's monthly bank statement.
Vallone is introducing legislation to prevent banks from imposing transaction fees on non-customer use of ATMs, hoping to have New York City follow Santa Monica and San Francisco, both in California, in enacting such laws. However, a preliminary injunction allowing banks in California to continue charging fees pending a finding on the constitutionality of the municipal statute was handed down recently. The federal judge in the case on cursory examination of the legislation felt the likelihood of a municipal law superceding a federal banking statute was remote.
The learned judge may very well be right. We accept that nothing in this life is really free, and ATM transactions are no exception. Banks are required to post their ATM fees, and no one is forced to use an ATM belonging to a bank other than the one where he or she has an account. However, not all banks have ATMs in 24-hour banking lobbies. Customers may have opened accounts with certain banks for reasons that have little or nothing to do with the location of their ATMs and may not be easily able to get to the one bank that takes their ATM card for no fee.
If what the City Council Speaker seeks are reasonable fees for ATM transactions, we feel this is a logical and reasonable position. A bank customer who wants or needs to use an ATM at a bank not his or her own should expect to pay for the convenience, but not at a markup of 200 to 400 percent. Convenience carries a price, but that price should not soar into the realms of usury.