Tempest in an ATM
Once upon a time banks gave away toasters to bring customers in the doors. Today, they charge extra for services rendered by a living teller and install automated teller machines to discourage customers from entering. The change has enabled banks to cut their overhead and given consumers the convenience of 24-hour access to their deposits and other services. But the change has also created a tension that grew into an open brawl when the governments of Santa Monica and other communities got involved. All the participants in this free-for-all are losers. This is an issue that markets, not cities, should settle.
Driven by consumer complaints about rising ATM fees, Santa Monica banned banks as of Thursday from levying surcharges for ATM use by noncustomers. A similar ban has been approved by San Francisco voters and by two states, Iowa and Connecticut. The Pentagon wants to do the same thing on domestic military bases.
Bank of America and Wells Fargo, California’s biggest banks, responded to the Santa Monica ordinance by saying they will block noncustomers from using the 33 ATMs they run in the city. They are considering the same action in San Francisco. Separately, the banks and their trade association have filed lawsuits seeking to overturn the laws.
The banks are right in arguing that no jurisdiction, local or otherwise, should require businesses to give away their services to those who are not their customers. After all, they argue correctly, by charging extra to noncustomers, the banks are not barring customers from using other banks’ ATMs, going to their own banks or becoming customers and using the ATMs without a surcharge.
But the banks are only half-right in claiming they are being forced to give ATM services away. Even without levying the user surcharge--typically $1.50 per visit--they share in a fee of about the same size charged by the customer’s own bank for the use of another bank’s ATM.
The clear message in Santa Monica’s law, and others like it, is that people consider the rising ATM fees unfair. Playing hardball with consumers is unlikely to win the banks new business.
The banking industry’s overall shabby treatment of customers can’t be defended. But the industry is right to protest lawmakers’ and voters’ attempts at ATM fee reduction. These are emotionally satisfying but illogical responses that merely create a new set of problems.
