ATM: Always Taking Money

A Fourth PIRG National Survey Of ATM Surcharging Rates

This PIRG national survey, done in March 1999, compares surcharging practices at 336 banks and 31 credit unions to the results of PIRG's spring 1998 report, "Big Banks, Bigger ATM Fees."


On April 1, 1996, the two largest Automated Teller Machine (ATM) switching networks, VISA’s Plus and Mastercard’s Cirrus, followed the lead of several regional ATM networks and ended their prohibition against member banks surcharging non-accountholders using their ATMs. The surcharge is in addition to the “off-us” or “foreign” fee over 80 percent of banks already charge their accountholders to use another ATM. Surcharging is not only anti-consumer, it is also anti-competitive, since it primarily benefits bigger banks, at the expense of small banks and credit unions. PIRG and Federal Reserve studies have documented that bigger banks charge higher fees than small banks; since surcharging leads to fewer low-cost competitors, all consumers will pay.

This PIRG national survey, done in March 1999, compares surcharging practices at 336 banks and 31 credit unions to the results of PIRG’s spring 1998 report, “Big Banks, Bigger ATM Fees.”

This 1999 PIRG report finds that the number of banks imposing surcharges has increased dramatically in the past year to 93 percent of all banks. Compared to PIRG’s 1998 report, overall surcharging by banks has increased 31 percent. An unprecedented 95 percent of big banks now surcharge. Big banks, which have the vast majority of all machines, impose higher surcharges, and surcharge at higher rates.

The survey findings are deeply troubling, especially against the backdrop of record bank mega-mergers and a seventh straight year of record bank profits. Meanwhile, many banks that were once surcharge opponents—such as Citibank, Chase and several large California banks—are now surcharging. Disappointingly, as this survey shows, growing numbers of small banks and even some credit unions are surcharging. Powerful bank lobbyists continue to stymie Congressional and state attempts to ban surcharges. Although the Massachusetts legislature has moved a surcharge ban (unanimously) through its Senate, the House speaker refuses to schedule a vote on the bill. Last month, the state’s two largest banks, Fleet and BankBoston, announced a merger which will allow them to control well over half of the state’s ATMs.

On the positive side, early results in court battles over the Iowa and Connecticut administrative surcharge bans have upheld those bans. According to Congressional testimony by the Connecticut Attorney General, that state’s ATM surcharge ban has not diminished a growth in the availability of ATMs. The numerous state legislative battlegrounds—where at least 25 states have considered ATM surcharge ban legislation in 1997, 1998 or 1999—have broadened to include City Councils. In the fall of 1998, the Philadelphia City Council approved an ordinance, subsequently vetoed, to remove city money from banks that surcharge. Although a coalition of consumer groups and unions lost a surcharge ban vote in the San Francisco Board of Supervisors in February, they plan to continue the fight. And, as the result of a U.S. Department of Justice investigation, ATM networks owned by big banks have eliminated illegal rules that prevented small banks from competing by forming selective surcharge zones. Members of the Sum Network (MA), for example, only surcharge non-Sum customers, but don’t surcharge each others’ customers, enabling them as a group to offer many more non-surcharging ATMs. This prevents their customers from switching to bigger banks to avoid surcharges.


Significant Increase In Percentage Of Banks Surcharging

Before April 1996, surcharging was only allowed in 15 states. It is now allowed in 48 states and the District of Columbia. Surcharging rates have increased dramatically in just three years. Surcharging is prohibited in Connecticut and Iowa.

  • In March 1999, according to this PIRG report, 93% of 336 banks in 23 states and the District of Columbia surcharged non-accountholders.
  • The percentage is 31% higher than the 71% found in PIRG’s April 1998 report, “Big Banks, Bigger ATM Fees.”

Big Banks

  • The percentage of big banks imposing surcharges increased from 83% to 95%, compared to PIRG’s 1998 survey.

Big banks own the majority of ATMs. For example, Nationsbank has over 6,000. Out of the approximately 9,000 banks nationwide, the 300 largest control nearly two-thirds of all deposits, according to the Federal Deposit Insurance Corporation (FDIC). We define those as “big” banks. 

Small Banks

  • From 1998 to 1999, small bank surcharging rates increased from 65% to 91%, compared to PIRG’s 1998 survey.

Credit Unions 

  • PIRGs also surveyed 31 member-owned credit unions and found that 42% imposed surcharges in 1999, up from only 13% in 1998.

Average Surcharges Increase

The survey found that big banks impose higher surcharges.

  • For all banks, the average ATM surcharge increased to $1.37 in 1999, up from $1.23 in PIRG’s 1998 survey.
  • Big banks imposed average 1999 surcharges of $1.42 and small bank surcharges averaged $1.30. Credit union surcharges averaged $0.98.

Off-Us Fees Charged Own Customers Increase

ATM surcharges must be added to the “off-us” or “foreign” fee nearly all banks now charge their own customers to use another owner’s ATM. Some banks may also impose an annual fee for an ATM card. Some of these banks may provide 5 off-us transactions each month for “free.” Credit unions often provide a similar number of free transactions, even without an annual ATM card fee. 

  • In 1999 the survey found 97% of banks imposed off-us fees averaging $1.20 on their customers using other owners’ ATMs.
  • Nearly all big banks (99%) charged their own accountholders off-us fees averaging $1.32 to use other ATMs.
  • Similarly, 95% of small banks charged their own accountholders off-us fees averaging $1.01 to use other ATMs.
  • Banks that imposed surcharges had higher ($1.20) off-us fees on their own customers than banks that didn’t impose surcharges ($1.00).