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Amendment to Financial Reform Bill Would Limit ATM Fees

WASHINGTON, D.C. -- Convenience stores and bankers find themselves on the same side of an issue for a change, as both industries oppose an amendment to the Senate financial reform bill that would cap ATM fees at 50 cents.

Although several convenience retailers such as Wawa, Sheetz, Quick Chek and Rutter's do not charge customers a fee for using their ATM machines, many c-stores make money from leasing space in their stores to ATM owners. Passage of the amendment, introduced by Senator Tom Harkin (D-Iowa), would "make many ATMs uneconomical and will lead to a dramatic reduction in the number and availability of these terminals and stop any production and distribution of new terminals," according to a report by the American Bankers Association (ABA). "This will mean great inconvenience for consumers and fewer choices."

Jeffrey A. Martin, owner and president of Welch Systems, a family-owned company that has almost 4,000 ATMs in 41 states (about 70 percent of them in retail outlets), recently wrote to Illinois Democratic Senator Richard Durbin, asking him to oppose the amendment to the Restoring American Financial Stability Act of 2010.

"Nearly half of the reported 425,000 ATMs deployed in the United States are non-bank owned. This industry exists because consumers are willing to pay a fee to get their cash conveniently. A $0.50 fee will not support the cost of equipment, cash, communications, armored service, maintenance or insurance required to operate an ATM," wrote Martin.

Martin's letter pointed out that all ATM operators, including banks, will be adversely affected by this amendment because they rely on surcharge fees to support the cost to operate. In time, though, banks are likely to benefit as consumers are forced to use their credit cards more due to lack of access to cash from ATMs.

Brad Cummins, director for Welch Systems, told CSNews Online the company is trying to make "all impacted businesses aware as this has been somewhat of a stealth maneuver by the Senate." He added the measure is one of approximately 190 amendments attached to the reform bill and is also opposed by NACS.

The bankers' association said 68 percent of all ATMs are in off-branch locations (retailers, airports, arenas, etc.). Access fees have led to innovations and new services, such as deposits without envelopes, which has added to customer convenience. In addition, the expansion of ATMs to more remote locations, especially in rural areas, as benefited consumers, but has also increased costs to manage and service the ATMs. "If a price cap were to be put in place, these machines would be the first to be eliminated," said the ABA. "Simply put, for any ATM where the revenues do not exceed the costs that ATM machine will disappear. At 50 cents per transaction, many will disappear."

The irony that the bank lobby and convenience stores are both opposed to this amendment wasn't lost on Cummins. "You will discover that the bank lobby is opposed to all reform in general, the entire bill is under attack from these folks," he said. "When our government overreaches in enough areas, we are all bound to eventually have common grievances."

The détente between banks and retailers is not likely to last. The fight to reduce credit card transaction fees imposed by accepting banks is still the No. 1 legislative priority of NACS, whose retail members cite credit card fees as their third largest store-level operating expense, following labor and rent.

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