ATM fees: what’s the impact?

By : Robert Johnston

November 17, 2014 03:11 PM

It seems like a simple equation for banks - add on a fee for using an ATM to generate enough income to offset the cost of operating the machines. Customers just don’t understand that it costs a lot of money to service, maintain and top-off cash machines. Moreover, if there are going to be ATMs located in convenient spots like gas stations and supermarkets there can hardly be any reason not to make customers pay for the privilege.

Needless to say, it’s not that simple, as the impact of ATM fees changes the equation that it’s part of. If there are fees on one machine but not on another, customers will always use the latter, obviously.

That’s not a particularly radical insight, but where it gets interesting is in how banks consider ATM fees in the context of the cash cycle and their cash management operations.

And it’s not just the fees on using ATMs - there are all sorts of variations with the accounts. One consumer might get charged at an ATM while the next person in the queue doesn’t.

For example, we see in some countries like Indonesia that some banks impose a limit on the number of free ATM transactions you can make in a month. This adds a new axis, with time throughout the month to be considered alongside other factors like location and major events, as well as the fees charged by the ATM and/or the account.

Next you also have to consider the positioning. How often have you seen a line of people waiting to use one ATM while there is a whole row of other banks’ machines left unused? It’s probably down to fees (or they’re broken, but that’s a whole other topic). So if you’re placing your fee-charging machine somewhere, the chances are it won’t need as much servicing as the free one next door.

Not only that, but the consumer waiting in line is making a time versus cost choice that is finely balanced. Are consumers really waiting in line because they mind the few extra cents? It depends very much on the transaction - taking out some cash is something most of us can wait a few minutes for as a basic ATM is all that’s required. For more complex transactions we may be more likely to pay more as we have limited choice of very modern machines that have a much broader range of functions.

It depends a lot on the market, naturally, as each country has different attitudes. In the US - and most other countries - people are used to the concept of paying for their checking or current account. In the UK, consumers see banking like the country’s health service and demand everything to be free at the point of service.

The point is that charging schemes conceived in a room at headquarters will have real-world implications on consumer behavior that need to be thought through. Nevertheless, fees are rising - the average levy banks charge their own customers for using an out-of-network ATM rose by seven cents over the last year, to an average of $1.52, according to

Learn more about NCR Financial solutions.


Robert Johnston

NCR Financial Services

Other articles by this author

Based out of NCR's R&D center in Dundee, UK, Robert Johnston is a global evangelist for NCR’s retail banking software strategy. Here, Johnston shares his insights on the banking industry and how consumers are driving today's conversation.