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Bill Virgin: Does anyone still use an ATM?

Fees for using an ATM machine not owned by your bank have topped $5 in some markets, according to a report from Bankrate.com.
Fees for using an ATM machine not owned by your bank have topped $5 in some markets, according to a report from Bankrate.com. AP

We haven’t played “Spot the Generational Differences” in awhile, but a recent report on ATM — automated teller machine — fees provides us a perfect opportunity to do so.

News item: Fees for using an ATM machine not owned by your bank have topped $5 in some markets, according to a report from Bankrate.com.

Your reaction:

a) That’s outrageous. Why should you pay so much just to have access to your own money? Somebody ought to do something!

b) This is a nonstory. By now most consumers are smart enough to know how to avoid ATMs that are going to gouge them. A lot of them have migrated to the credit union system, whose network doesn’t go in for this.

c) This is a nonstory. People are paying for purchases, even small ones, with plastic and with mobile-device-based payment systems, instead of cash. They won’t notice ATM fees rising because they’re not using ATMs.

d) What’s an ATM?

e) What’s cash?

The national average for off-network fees, Bankrate.com says, was $4.52; that’s a combination of what the owner of that ATM will charge as well as the fee your own bank will ding you for.

Of the 25 major cities that Bankrate.com surveyed, Seattle ranked 21st, at $4.21. Atlanta was No. 1 at $5.15.

But that’s only by comparison. Take a step back from the touch screen and think for a moment of the absurdity of paying $4.21, or even $3.21 or $2.21 or 21 cents, to get at your own cash. Paying that much is a sign of inattention, or laziness, or having way too much money for your own good.

Someone is paying those fees. Bankrate.com quotes an SNL Financial study from earlier this year that “the five largest banks in the country made $283 million off ATM fees in the second quarter of 2015 alone.”

But for how much longer will they?

One reason for higher fees is that people are using them less frequently, so banks need to recoup lost revenue. That trend is backed by yet another report, this one from Pulse (a Discover-owned operator of an ATM and debit-card network), which says the number of monthly ATM withdrawals per active debit card dropped from 3.4 in 2005 to 2.0 in 2014.

Real-world experience and observation is a little less convincing. You can still encounter lines at some ATM locations. Some financial institutions no longer handle cash in their branches, letting ATMs handle those chores. The ability of machines to read and count cash and checks makes them far more useful to and efficient for small businesses making deposits. Worldwide, the number of ATMs is growing.

But stand in some lines at other places and you see some ominous signs for the future of cash and the ATMs that dispense it — a Starbucks, for example. How many people are paying with paper and metal money compared with the number paying with credit, debit or a store card, or even via wireless transfer from a mobile device?

That same Pulse study documenting a 10-year decline in ATM usage by debit-card holders also reported an increase in monthly point-of-sale transactions from 16.1 to 21.2 over the same period. Other data report a surge in mobile-app transactions.

If indeed the ATM has moved to the category of mature banking technology, that would make for a remarkable transition, at least for those of us of advanced age who remember the Medieval, pre-ATM period of banking, replete with such quaint customs as cashing checks and scrambling to get to the bank, and one’s money, before it shut for the weekend.

The ATM promised to change all that, and to save banks money in the process. Indeed it was transformative, and Americans adapted to and adopted them as mainstream.

But ideas for making ATMs into versatile dispensers — postage stamps, bus passes, ski-lift tickets — never caught on, and consumers are finding alternatives to the basic functions of the machines, dodging fees in the process.

The next transition may not occur as quickly; predictions of the ATM’s demise are not new.

But it is going to come. That’s potentially good news for consumers, who will find it easier to avoid those $5 ATM fees. Any optimism over this is tempered by the prospect of higher transaction fees that banks, system operators and merchants may impose.

The potentially bad news for the banks: Fee income from ATMs declines with usage but the expense of operating them doesn’t as consumers regard the cash machines much as they do physical branches and paper checks — something they hardly use, but are still nice to have around for the rare moment that they do.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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