Hay,I think you will find that most analysts have built in at...

Hay,

I think you will find that most analysts have built in at least 15% decline in transaction volumes into their models and are still coming up with values well in excess of current prices.

If you don’t mind, I will contest your view of NAB’s product and the way forward:

A) NAB do indeed offer a free atm usage with NAB Gold banking…except it costs you $5pcm as a classic customer first and a further $12pcm for gold banking….hardly free.
B) Banks have the same costs as ATM operators in offering an ATM service. To believe that Banks would simply absorb that cost beggers belief.
C) The reason that NAB are offering this product to customers of competing banks aswell as their own is because they know that, with the current financial uncertainty and rising interest rates, this is a good time to pitch for business.
D) All banks currently charge $1.95 to $2.00 per foreign ATM transactions right now. It is unlikely that, now that they have established this charge base, that they will back away to a free service…these are banks we are talking about!!!
E) All ATM’s, including the banks) will have to disclose a fee when dispensing cash. CUS and Cashcard machine wont be the only machines to disclose.
F) The cost breakdown is well documented. No one has suggested that they keep $1.75 per transaction. Again, analyst models do clearly build costs into their valuations.

Lastly, the last two points you raised are the possibility of further delays and increased competition, neither of which we can deny as risks. However, we are closer to Surcharging today than we were yesterday, and if competition were to be an issue, I believe it better to be one of the dominant players rather than a fringe dweller.

I think what is being lost here is the ability to see through to the end game. There is a lot of money around for those who offer convenience. The banks recognise this and are attempting to get into the action. The big Four currently stand to lose 40c in each transaction that is put through a Cashcard or Customers machine. I make that approx $70 mill in lost revenue between them. They will be keen to take action to capture that back and enticing clients to apply online to pay $12 a month for “free ATM services” is one such way.

Conclusion: If you don’t want to pay ATM fees, go to your own bank and use the ATM machine there. Otherwise, be happy to pay $1.75 - $2.00 for the convenience of getting money out of a machine near you.


NAB Product:
http://www.nab.com.au/Personal_Finance/0,,89917,00.html