ATM fee reforms a failure for Aussie consumers

Despite the widely assumed belief that the ATM fee reforms championed by the Reserve Bank of Australia (RBA) last year would encourage competition and bring ATM fees down, analysis by financial comparison website, mozo.com.au, shows that many Australian consumers are paying more in ATM fees now than 12 months ago.

This week marks the first anniversary since the RBA reforms went into effect, which allowed ATM owners to charge customers directly for using their machines. In an analysis of 37 different transaction accounts from 22 different banks, building societies and credit unions, Mozo found 15 accounts where an average customer* now pays more transaction costs than a year ago, 17 accounts where there’s been no change, and only 5 accounts where the average customer is paying less.

The most affected by the change are customers of smaller, innovative banks and financial institutions which used to allow free transactions at other banks’ ATMs, such as customers of CUA, AMP Bank, BankWest, Newcastle Permanent, IMB, Rural Bank and Citibank.

Rohan Gamble, managing director of Mozo, said: “These reforms have simply played into the hands of the Big 4 Banks at the expense of the challenger brands and Australian consumers.”

“Instead of encouraging innovation in bank accounts, smaller challenger banks have been penalised, and their customers now get slugged for using other ATMs that used to be free.”

While consumers can reduce ATM fees by seeking out their own bank’s ATMs, Reserve Bank statistics show that we don’t. Only 60% of ATM withdrawals are made from ATMs belonging to a customer’s own bank, up only slightly from 56% just before the changes a year ago.

“As for the touted competition on fees between ATM providers, this just hasn’t materialised,” added Mr Gamble. “Almost all ATMs charge $2.00, even in shopping centres where competing ATM machines sit side by side.”

“The net effect of the ATM reforms has been more bank fees. And its not as though we need more of them, particularly as the sting of the latest RBA rate rises hit home.”

*For the purpose of the analysis, we assumed a customer makes 2 ATM withdrawals from their own bank’s ATM, 1 from another bank’s ATM, and 5 EFTPOS transactions each month. These are based on RBA statistical averages, rounded to whole numbers. The analysis uses actual product fee structures on 1 March 2009 and today, including fees for EFTPOS and ATM transactions and the number of free transactions granted. It assumes an ATM transaction outside your bank’s network will cost $2.00 today, and that there has been no change in transaction behaviour over the period.