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NAC Responds! - A Letter to the WSJ Editor RE: "ATM Fees Increase"

November 3, 2015

Dear Mr. Berman:

wall-street-journalThe October 2, 2015 article entitled "ATM Fees Increase" leaves your readers with the erroneous impression that "record ATM fees" are the result of increases in the fees charged by operators of ATMs. The real sources of such price hikes, however, are the charges that banks impose upon their cardholders when using any ATM other than that bank's own ATMs. These fees are commonly referred to as "foreign ATM fees" - and they are the root cause of the problem - both for consumers and competitive ATM owners/operators.

There are important differences between access fees paid to ATM owners/operators and the "foreign ATM fees" imposed by the cardholder's own bank. The latter are entirely separate from the fees charged by the ATM provider (who, in many cases, is the merchant where the ATM is located). The fees charged by ATM owners/operators are competitively priced, fully disclosed at the time of the transaction, and have remained stable over recent years. The same cannot be said for the "foreign ATM fees" imposed by the banks.

Consumers are often unaware that the "foreign ATM fees" for using retail ATMs are charges imposed by their own banks and not ATM deployers. These "foreign ATM fees" are typically disclosed in fine print buried in the bank's depository/card agreements (or the bank's website), but they are not disclosed to the consumer at the time they are incurred. The marked increase in "foreign ATM fees" over recent years adversely affects both cardholers and the independent ATM industry, without any corresponding benefit. This is especially true in communities where banks have no ATMs of their own (and therefore none ofthe associated ATM costs) - and yet still charge "foreign ATM fees" as a penalty for using competitive ATMs in that locale.

Independent ATM operators are required by law to disclose their ATM access fees on the ATM screen at the time of the transaction, providing cardholders an opportunity to "opt out". By contrast, "foreign ATM fees" are disclosed on the consumer's bank statement at the end of the billing period, long after any opportunity to cancel the transaction, or even evaluate the reasonableness of the extra fee, has passed. Thus, while ATM access fees are completely transparent and user-friendly, bank imposed "foreign ATM fees" are anything but.

Finally, consumers value the convenience of using an ATM at a location where none of their own bank's ATMs are readily available. This value and the underlying market demand for widespread access to cash have resulted in more than triple the number of ATMs being deployed in the U.S. since ATM competition was first introduced in the late 1990s. While ATM owners/operators charge fees that are proportional to the actual cost of providing the ATM service, the "foreign ATM fees" imposed by card issuing financial institutions bear no real relationship to the cost of the ATM transaction. "Foreign ATM fees" are, therefore, really disloyalty fees imposed as a penalty on customers for using ATMs not owned by the bank.

Nearly two out of every three ATMs in the U.S. are operated by independent, non-bank ATM operators, for whom every transaction is a "foreign" transaction. Your readers deserve to know that the increases in "foreign ATm fees" which penalize bank customers for using independent ATMs are just as objectionable to ATM operators as they are to consumers.


Bruce W. Renard
Executive Director
The National ATM Council, Inc.


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