Abington Savings Bank Executive Vice President Kevin Tierney speaks out against a proposed ban on ATM surcharges on behalf of the Massachusetts Bankers Association on Beacon Hill.
Despite the success of the SUM surcharge-free program, ATM fees are still a problem, according to testimony on a bill heard before the Joint Committee on Banks and Banking.
Several other bills were also before the committee. However, none garnered as much attention as the possible ban on ATM surcharges and another banning fees for in-person transactions with bank employees. Senators, consumer groups, banking advocacy groups and multiple media outlets crowded into the small hearing room on Beacon Hill for the hearing last Tuesday.
Speaking for the Massachusetts Bankers Association, Abington Savings Bank Executive Vice President Kevin Tierney said prohibiting ATM fees would inhibit free trade in the marketplace. The bill, which would abolish any fees banks or ATM companies could charge for non-customer transactions, would “hamper consumer choice,” he said.
When ATMs began proliferating throughout the state, officials at many smaller banks were afraid that Fleet, which owned the most ATMs, would seduce non-customers who were charged a fee to use Fleet machines into becoming Fleet customers, said Tierney. But since the creation of the SUM network, that hasn’t happened, he said.
The SUM program, whose members agree not to charge each other’s customers a transaction fee, is an example of the free market creating an answer that benefits consumers. No law is necessary, said Tierney.
Under questioning by members of the committee, Tierney said that there are 5,500 ATMs in the state and of those 1,850 are in the SUM network, leaving the rest open to surcharging.
“We know that surcharging affects a relatively small percentage of the [consumers],” said Tierney. Rep. Philip Travis, D-Rehoboth, pointed out that in 1997 the MBA predicted that ATM fees would not rise above more than $1 in the near future. Since that is the average price for using an ATM, there is no need for a ban because consumers have been a driving factor in keeping costs down.
As for non-bank ATMs, a bank would probably put them out of business, said Travis. There are about 1,500 non-bank ATMs in the commonwealth. A law which would have the net effect of wiping out that many machines would inconvenience consumers rather than help them.
Consumer Costs
But Deirdre Cummings, consumer program director of the Massachusetts Public Interest Research Group, said oftentimes consumers get charged once by their own banks and again by the bank that owns the ATM, resulting in fees upwards of $2.
“Our argument is the cost of technology is declining, but when we use technology in banks, it’s costing us more and more. What we’re saying here is let’s put the brakes on,” she said.
Whether to ban ATM surcharges is an issue that returns time and again. In 1999 the bill made it out of committee with a favorable recommendation only to be defeated on Beacon Hill. This time, however, the Community Bank League of New England does not support the ban, as it once did. “Which is quite a turnaround,” said Dale Zelony, director of legislative services for CBLNE. “Our banks went into total panic and thought it was going to kill their business,” she said of the initial fear that Fleet would overrun the ATM market.
Eighty of the 101 member banks in CBNLE belong to SUM, but when questioned by Sen. Andrea Nuciforo Jr., D-Pittsfield, as to why all the member banks aren’t in the program, Zelony responded, “Quite frankly, they’re in locations where they can make quite a bit of money.”
Many of the member banks are on Cape Cod and benefit from charging tourists a surcharge for the convenience of getting extra cash while vacationing. A ban would eliminate that revenue source.
Sen. Dianne Wilkerson, D-Boston, also opposes fees and is sponsoring a bill that would prohibit human teller fees at banks when customers make an inquiry or complaint or “activities over which the consumer has no control.”
Wilkerson told of being a Fleet customer who was transferred to Sovereign Bank of New England during the divestiture. The Saturday on which it occurred, she received four ATM cards, none of which she could use because all of them had her name spelled incorrectly. Because of numerous inquiries to correct the problem, “I had gone over the allotted number of phone calls because they lost my money for two weeks,” she said. Customers should not pay for mistakes made or issues that need clarification as a result of “merger mania,” she said.
Speaking on another similar bill that would ban human teller fees, David Floreen, senior vice president of the MBA, said there are some misconceptions when it comes to fees. It’s a choice consumers can make when they want a very low-cost account, he said. The customer chooses the account when they are comfortable transacting business through ATMs.
“It’s not an account for everyone,” he said, adding that the Department of Motor Vehicles offers residents a $5 discount off their vehicle registration fee when transacting business online.
Offering compromise, Nuciforo asked Floreen if he would be satisfied if the bill contained the language, “There shall be no human teller fees unless they’ve checked that box.”
Floreen responded by reciting a longstanding argument within the industry: The best determinant of product in the marketplace is whether customers go to another bank, not legislation.
Other bills heard before the committee included a bill by Rep. Jarrett T. Barrios, D-Cambridge, requiring banks to file a list of fees with the state treasurer’s office and a bill that would increase deposit limits for credit unions.
