Talking Back to the ATMs

The number of automated tellers in America nearly quintupled between 1983 and 1995. Though we first approached these novelties with trepidation, today many of us have come to view our ATM cards, with their plus, star and other talismanic symbols, as synonymous with cash.

But now the system that was to have reduced our banking costs is threatening to send them upward once again. In April, after heavy lobbying by the banking industry, the nation’s two largest ATM networks, Visa’s Plus and MasterCard’s Cirrus, lifted their restrictions on how much banks can charge non-customers who carry out transactions on their ATMs.

To bring these fees back to earth--they have been running up to $3 a transaction in addition to the $1 assessed by the home bank--Rep. Marge Roukema (R-N.J.) has introduced a bill that would require the shock value of on-screen disclosure of the cost of any ATM transaction.

On July 18, however, Roukema abruptly postponed committee consideration of her bill, reportedly to tack on a “manager’s amendment” that would assuage concerns voiced by the banking industry. Roukema’s amendment is expected to strike out original language that asks the Federal Reserve to keep a running tally on how much ATM operators are charging.

The banking industry clearly fears that this tally could open the door for more federal regulation of ATM fees. And that’s a legitimate concern, for Senate Banking Committee Chairman Alfonse D’Amato (R-N.Y.), responding to pressure from his constituents, is ready to bolt through that door with a bill banning ATM surcharges altogether.

D’Amato’s bill is stirring a healthy debate that may lead to a consensus on the need for regulating surcharges in the future. He argues that the present system benefits big banks because they can offer their customers access to a wide network of ATMs that don’t assess surcharges. But some small banks worry that they too might lose customers if D’Amato’s bill passes. For if big banks are not allowed to make a profit from a transaction, they will be less motivated to offer ATM access to small bank customers.

Given the uncertain future of D’Amato’s bill, Congress should swiftly endorse Roukema’s more modest and viable one. Its requirement that bank charges be disclosed on the ATM screen not only meets an important ethical standard, it encourages the free market. For only if fees are revealed will ATM providers compete with one another, a process that ultimately benefits the consumer.