Banks $200m ATM grab sabotages RBA plan
Banks must commit to dropping foreign ATM fees.
CHOICE says the big banks should scrap foreign ATM fees altogether when the Reserve Bank of Australia dramatically overhauls the system next month.
From March 3 consumers will pay ATM fees directly to the owner of the machine at the time of transaction. Under the previous system, customers were charged a so-called ‘foreign’ ATM fee by their bank for using an ATM other than their own.
CHOICE has criticised the National Australia Bank’s decision to charge its own clients 50 cents in addition to the fee they will be charged directly by the ATM owner under the new reforms. The consumer group says if the other banks follow suit by adopting this practice, consumers stand to lose $200 million a year in extra fees.
“Direct ATM charging should put an end to the mark-ups that banks have been creaming off the top of ATM fees. But the benefits of direct charging reforms will be quickly undermined if customers are charged a separate, second fee from their own bank,” said CHOICE senior policy officer Elissa Freeman.
The direct charging reforms are being implemented after years of consultation and planning and are designed to improve competition between ATM providers and increase transparency in pricing for consumers.
The Reserve Bank of Australia says it sees no reason why financial institutions should charge foreign fees when their cardholders use an ATM owned by another institution.
Westpac, ANZ and the Commonwealth Bank remain silent on whether they, like the NAB, plan to charge their customers foreign ATM fees when the changes go ahead.
According to data from the Reserve Bank, in the 2007/08 financial year, Australian customers made over 400 million cash withdrawals from foreign ATMs, accounting for 48% of all cash withdrawals at ATM machines.
“We know that almost half of all ATM cash withdrawals are made outside of a bank or credit union’s own ATM network. This means if every financial institution follows the NAB’s lead, Australian consumers could be out of pocket to the tune of $200 million a year,” said Ms Freeman.
“One fee is enough for consumers to access their cash. The Big Four banks should back these reforms and eliminate their foreign ATM fees.”