Greens demand $2 banks fees be abolished

Thursday March 11, 2010

The Australian Greens political party has asked that major banking brands in Australia scrap the $2 ATM fee currently charged to customers who use a competitors ATM, although it has not extended this to any building societies, credit unions or independent ATM operators.

The political party is proposing that trade practice laws be amended so that Australian banks are no longer able to charge this fee to their customers. This fee has generated around $680 million per annum for the banks and other financial institutions since its introduction last March.

The direct charging system that is currently in place was introduced by the Reserve Bank as part of its payment system reforms, to encourage greater discretion for any fees charges and increase the supply of ATMs in Australia.

Greens leader Bob Brown said that the fee does not accurately reflect the cost to the banks and is well above a reasonable chare.

"Australians spend around $1000 on bank fees (annually), 20 per cent more than in the UK where ATM fees don't exist," he said.

"The Reserve Bank estimated it was about 50 cents in 2000, which is likely to be even lower now."

However the Australian Bankers' Association (ABA) has released a statement calling the Greens proposal "short sighted" as it will potentially end up causing 15 million bank customers to pay fees that they currently do not. The ABA also stated that such a change may result in less ATMs being installed outside major metropolitan regions.

David Bell, Chief Executive of the ABA, stated in the release that that the anti-competitive proposal against bank customers may result in fees being paid by customers to use their own-bank ATMs, due to the fact that non-customers of the bank would be able to use the ATM service for free.

"Under this proposal, banks might have to consider limiting withdrawals to their own customers thus denying greater opportunity for customers to access funds - especially in emergencies." Mr Bell stated.

"It's also relevant to note that banks own less than half of all ATMs in Australia - Senator Brown's policy proposal is anti-competitive as he excludes credit unions, building societies and the independent deployers of ATMs."

"Perhaps this is policy on the run because consumers are well ahead of the Senator on this issue. That is, use of own-bank ATMs is growing at a strong rate while use of foreign ATMs is falling at a record rate. There was a massive fall of 65 million transactions at foreign ATMs over 2009. At the beginning of 2007, foreign ATM transactions were just on half (49%) of all ATM transactions, this has fallen back to 40%."

"Also, the number of EFTPOS transactions which involve a cash-out is increasing at the fastest pace on record. In fact, only two years ago foreign ATM transactions were almost double EFTPOS cash-outs (i.e. 91% more) now it has fallen sharply to 42% more."

The ABA recommended that the consumer can be more active in preventing being charged these additional fees by advocating the use of online banking where possible and only using the customers own banks ATMs.

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