Lower ATM fees not guaranteedSeptember 01, 2007 07:34pmCHANGES...

Lower ATM fees not guaranteed
September 01, 2007 07:34pm

CHANGES to ATM fees charged by banks might not result in lower costs for customers, Choice and the banking industry warned today.

And the Australian Bankers Association (ABA) says the changes will not mean all fees will be abolished.

Under the Reserve Bank of Australia (RBA) reforms, from October next year banks will no longer be able to charge each other when non-customers use their ATMs, a system that has been used as the excuse for some banks to charge customers as much as $2.50 per withdrawal.

Instead, customers will pay the owner of the ATM, not their own bank.

Any fees will have to be disclosed on screen and approved by the customer before completing the transaction.

The reserve bank predicts the subsequent competition between banks will drive down or even abolish the fees.

Prime Minister John Howard urged the reforms be brought in sooner.

"I'll be asking the banks and the government will be asking the banks to accelerate the introduction of these changes," he said today.

"The negotiations between the RBA and the banks have now been going on for three years.
"I don't understand why customers have to wait another 14 months for these changes to be introduced."

But Choice policy manager Gordon Renouf warned lower costs were not guaranteed.

"We certainly would like to see the 'foreign' bank ATM fees come down closer to what it actually costs, which is about 50 cents on average per transaction," Mr Renouf said on Sky News.

"So, we think if it didn't get within that 50 cents to $1 range for most people then the reform would have failed.

"That's the good side. The bad side is where it is uneconomical to have an ATM the risk at the moment is there won't be one at all. The risk in the future will be that it will be quite expensive."

There the necessary competition would not exist in all areas, he said.

"The theory here is that ATMs will be competing more directly with each other and the consumers will be more aware they're paying an amount because it will be on the screen rather than not finding out about it for a month.

"That's the argument in favour of these reforms, that competition will bring prices down.

"The argument against them is that in certain areas where the market doesn't work so well such as small regional towns or such as gaming venues, late night venues, that sort of thing, there'll be opportunities to charge much more"

ABA chief executive David Bell today also warned the reforms would not mean all fees would be abolished.

"These reforms mean that people will still pay to use ATMs," Mr Bell said on Sky News.

"In fact, when people use non-bank ATMs elsewhere or overseas they may even pay more than $2.50," he said.

"So, let's be clear these reforms don't mean that people will not pay fees. It means that the way they pay fees will change."