Mercator Blog

The Downside of Capping ATM Fees
Date: March 4, 2014
Karen Augustine
Manager, Primary Data Services
ATM fees periodically fall under regulatory scrutiny in the United States and abroad. For example, in an effort to expand “no-cost basic banking services” in Canada, the New Democratic Party recently proposed a limit of 50 cents on withdrawal fees at automated teller machines owned and operated by banks, credit unions, or other financial institutions. Such a limit might do more harm than good to consumers and the self-service banking industry as a whole if it were to be instituted and result in financial institutions limiting the number of their ATMs in nonbranch locations. (The proposal, however, may not apply to the many nonbank ATM machines at convenience stores, restaurants, bars, and other locations.)

Consumers in the United States are increasingly taking advantage of ATMs at nonbranch locations, according to the results of the latest Mercator Advisory Group Insight Report, Self-Service, ATMs and Other Channels: Rising Use in a Mobile Era, based on the CustomerMonitor Survey Series Banking and Channels survey, which was conducted in November 2013 with an online panel of 3,003 U.S. adults who had at least one banking relationship.

Our survey found that ATM use in the U.S. is rising, as 78% of consumers surveyed said they used an ATM at least a few times a year, up from 74% of respondents surveyed in 2012. While nearly all ATM users use their own bank’s ATMs, more consumers reported using the ATMs of banks they do not do business with (22% of ATM users did in 2013, up from 17% in 2011) and ATMs that are not bank branded (16% of ATM users in 2013, up from 12% in 2012). In fact, 24% of ATM users at least occasionally use the ATMs of other banks (“foreign ATMs” in bank parlance) or non-bank-branded ATMs in nonbranch locations. The number of users willing to do so is rising as consumers increasingly desire convenience and are now more willing to pay for it.

While most ATM users still admit that they would do anything to avoid paying ATM surcharges (and certainly find ways to avoid surcharges), fewer do so (73% of ATM users in 2013, down from 79% in 2012). On the contrary, more ATM users are willing to pay ATM surcharges for ATM convenience at least occasionally, although they try to use their own bank’s ATM machines (38% of ATM users did so in 2013, up from 30% who reported doing so in 2012). Nearly 1 in 4 ATM users said they are willing to pay an ATM surcharge to use a conveniently located machine.

Our findings show that more consumers are using ATMs, they are using a wider variety of ATMs especially in nonbranch locations, and they are using ATMs more frequently. ATM convenience, number of ATMs in the consumer’s local area, and the types of transactions enabled on the ATMS are becoming of increasing importance in new bank selection.

In order to familiarize you to the CustomerMonitor Survey Series reports, Mercator Advisory Service is now offering Self-Service, ATMs, and Other Channels: Rising Use in a Mobile Era at a special one-time, introductory cost of $5,000. This 66-page report, with its 28 charts showing survey findings, includes demographic trends on ATM use; year-over-year trends on use and frequency of self-service, ATM, mobile, tablet, and online banking channels compared to the branch; preferred methods of getting cash and depositing checks; and consumers’ interest in mobile cash access and in-branch videoconferencing for bank transactions or to speak with bank representatives.