Bendigo and Adelaide Bank’s unique policy of charging its own customers to withdraw cash is facing a consumer backlash.
EXCLUSIVE: Bendigo and Adelaide Bank – the only Australian bank to swipe fees from its own customers at ATMs – is reviewing its fee structure to stave off a backlash from customers who regularly use the bank’s network of 2000 automatic tellers across the country.
Consumer advocate CHOICE has labelled the charges “an outrage”, and called on the bank to fall into line with the rest of the industry.
“ATMs are one of the basic banking services required by most Australians and they should not be a way for banks to just raise money,” CHOICE spokesperson.
Holders of Bendigo’s Blue Debit and EasyMoney cards are charged 70 cents each time they make a withdrawal or balance inquiry at one of the bank’s own ATMs.
In response to questions from The New Daily, Bendigo spokesman Owen Davies confirmed that the fees were being levied on customers.
“It is correct to say Bendigo charges customers 70 cents for an ‘own bank’ ATM withdrawal,” he said.
“We are reviewing fees.”
Bendigo’s policy of charging customers to use its ATMs helped it achieve profits of around $380 million in 2014.
NAB loads up on ATM fees
In the past 18 months National Australia Bank has quietly restructured its ATM fees with the aim of raking in tens of millions in extra revenue.
NAB has increased the fee it charges customers of other banks to withdraw cash from its ATMs from $1.50 to $2. This fee is known within the industry as a “foreign ATM fee”.
Even more worrying is the rise in the fee for making a balance inquiry at a NAB ATM.
This fee has quadrupled from 50 cents to $2 for customers whose ATM cards were issued by another bank.
The New Daily asked NAB to explain why these fees had increased by so much. Here’s the response from a bank spokesman:
“These changes are reflective of changes in customer behaviour that have led to increased costs in running an ATM network, which is an important service that NAB is committed to providing.
“Our ATM network is a service for our customers and NAB customers don’t pay any fees to use these ATMs.”
In other words, NAB doesn’t care how much they slug other banks’ customers.
Banks’ profit margins on ATM fees exceed 100 per cent
NAB’s argument about “increased costs” is absurd and misleading.
According to research published by the Reserve Bank last year, the average cost borne by banks for issuing cash from an ATM is 77 cents.
This means that the industry’s standard $2 charge on foreign ATM withdrawals delivers the major banks a profit margin of more than 100 per cent.
Of course, the mark-up on balance inquiries is even greater because the banks incur no cash-handling costs for just furnishing information through ATMs.
Such operating margins are an indictment on an industry that likes to portray itself to regulators and consumers as ‘efficient’ and ‘competitive’.
Profit margins of this magnitude do not occur in industries where genuine price competition flourishes.
Few other Australian industries are permitted by market forces or regulators to wrangle such margins from customers.
It is blatant gouging that hands the banks more than $600 million a year in additional revenue, more than half of which goes directly to bottom-line profits.
The scary part of this story is that independent deployers of ATMs at pubs and pokies venues are known to charge up to $5 for the privilege of making a cash withdrawal from one of their machines.
Customers disillusioned, regulators impotent
ATM fees are the most detested of all charges levied by banks, according to a survey conducted by market research firm Galaxy in 2014.
The Reserve Bank promised in 2009 that its reforms would induce more competition in the provision of ATM services.
Five years on, the evidence for robust price competition in this segment of the banking market is wafer-thin to non-existent.
Since the reforms were implemented no bank has reduced its fees, even though the RBA’s research shows that the cost to institutions of ATM withdrawals has risen by only 14 cents from 63 cents to 77 cents since 2006.
“ATM fees are out of proportion to the cost of using the service,” said Mr Levey.
“Balance inquiries cost the banks very little – there’s no excuse for charging people $2 or more just to check their balances.”
Your guide to avoiding ATM operator fees
If your bank does not have an ATM nearby and you need to withdraw cash urgently try to find another institution’s machine that has a fee-free agreement with your bank. Here’s a list of allied ATM networks in Australia:
The Reserve Bank promised in 2009 that its reforms would induce more competition in the provision of ATM services. Photo: AAP
• CBA customers can use all Bankwest ATMs at 7-Eleven stores
• NAB account holders have fee-free access to Rediteller network ATMs
• Westpac customers pay no fees at St George, Bank of Melbourne and Bank SA ATMs
• Bendigo and Suncorp customers can use either bank’s ATMs without incurring an operator fee.
• ME Bank customers have free access to Westpac, St George and Bank of Melbourne ATMs
• ING Direct will rebate all ATM fees to customers who deposit a minimum $1000 into their transaction accounts each month.
Avoid making balance inquiries at another bank’s ATM. Check your account balance on the internet or over the phone instead.
Some banks offer accounts that give customers unlimited fee-free withdrawals through EFTPOS terminals.
Here’s what the banks charge outside customers to use their ATMS:
$2 – NAB, CBA, Westpac, ANZ, Bankwest, Bendigo and Adelaide, St George.
$2.50 – Suncorp, Rediteller ATMs, Cashcard ATMs
$3-$5 – The non-branded machine in the dark corner of the pubAuthor: George Lekakis Financial Services EditorSource: thenewsdaily.com.au