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Should Cities Be Allowed To Ban ATM Fees? |
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| Consumer issues certainly have their national champions like Ralph Nader, and with much hard work they can be implemented on the federal level. Still, many customer protections continue to come from the ground up, through local governments, where legislators are closer to constituent concerns and can act more responsively. Nothing in our Santa Monica law demands banks give customers something for free. ATM fees are paid in exchange for a very real service, and all our ordinance requires is that consumers be treated fairly. There has long been a fee your own bank charges when you use a competitor's ATM. That "network" fee is shared between the banks, allowing both to make a profit. Our law eliminates only a second fee, or "ATM surcharge," added on by banks fairly recently. Paying a separate fee to each bank is like having toll booths at both ends of a bridge. How fair is the surcharge? Well, no matter what the TV commercials suggest, your money isn't hustled from bank to bank in a hurtling stagecoach. The transaction is a nanosecond's digital exchange between bank computers. CALPIRG, the California Public Interest Group, estimates the actual cost of an ATM transaction at twenty-seven cents, so there's little to justify this second hand in the consumer's pocket. What's more, confronting a second fee often puts the consumer in an unfairly powerless position, perhaps in an unfamiliar neighborhood late at night. That's not a free market, it's circumstantial strongarming. Bank of America and Wells Fargo have closed their Santa Monica ATMs to non-customers, and those two banks already control 72% of our city’s ATMs and 60% of the ATMs in California. With ATM placement so dominated by megabanks, the point-of-withdrawal second fee which goes solely to the ATM owner funds even greater presence by them, handicapping our credit unions and small banks. Surcharges give ATM-rich banks an unfair competitive advantage, encouraging customers to defect from banks with fewer ATMs. Big banking has contested our ATM surcharge ban and we are waiting for court resolution. The most recent decision moves our case forward to the Ninth Circuit Court of Appeals, where we'd originally asked to be heard. The Ninth Circuit ten years ago ruled that states do have regulatory power over ATMs, and despite the lower court we're confident our ordinance will be upheld on appeal. So when this turns out to be a consumer victory, what should the banks do? Certainly not deny their services to the public, as Bank of America and Wells Fargo have done (even though we in Santa Monica voluntarily haven't enforced our law pending the court decision). One transaction should incur only one fee, from the consumer's home bank. This would let the customer and the bank effectively and equitably negotiate the true cost and the true value of ATM use. A predictable fixed and divulged fee the home bank charges for using other banks' ATMs, then shares with that other bank, is something a consumer can comparison-shop. Banks can compete in a free and fair market. It's that free market Santa Monica's asking for, not a free service. |
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