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ATM fees: does bank size matter?

Author

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  • Joanna Stavins

Abstract

ATM networks have allowed banks to charge non-customers for withdrawing money from their ATMs since 1996, but ATM surcharges have been criticized repeatedly by consumer advocates and politicians. Large banks have been especially targeted, because they are more likely to impose the fees and their fees tend to be higher than those charged by small banks. However, surveys comparing ATM fees across financial institutions do not control for differences in quality among banks of various sizes. ; This article analyzes differences in ATM fees among banks in order to test whether large banks impose higher fees than do small banks. The author uses regression analysis to control for quality and costs of banks' ATM services, as measured by the number of ATMs and the fraction of machines located off bank premises. Banks with more ATMs offer greater convenience to cardholders, and institutions with more off-premise machines tend to have higher costs. The author finds evidence that large banks impose higher surcharge fees, but the difference in foreign fees becomes insignificant after the number of ATMs is taken into account. She notes that there are no economic reasons to ban ATM surcharges, since customers can and, for the most part, do avoid paying surcharges by finding machines that do not impose them.

Suggested Citation

  • Joanna Stavins, 2000. "ATM fees: does bank size matter?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 13-24.
  • Handle: RePEc:fip:fedbne:y:2000:i:jan:p:13-24
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    File URL: http://www.bostonfed.org/economic/neer/neer2000/neer100b.htm
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    File URL: http://www.bostonfed.org/economic/neer/neer2000/neer100b.pdf
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    References listed on IDEAS

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    1. David B. Humphrey, 1994. "Delivering deposit services: ATMs versus branches," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 59-81.
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    Cited by:

    1. Alicia García-Herrero & Josep Vilarrubia, 2007. "The Laffer Curve of Macroeconomic Volatility and Growth: Can it be Explained by the Different Nature of Crises?," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 43-60, January-J.
    2. Prudence Serju, 2007. "Estimating Potential Output for Jamaica: a Structural VAR Approach," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 1-22, January-J.
    3. Prosper F. Bangwayo-Skeete & Ryan W. Skeete, 2007. "Regional Integration and Elasticities of Export Demand in Barbados," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 23-41, January-J.
    4. Ágoston, Kolos Cs. & Benedek, Gábor & Gilányi, Zsolt, 2016. "Pareto improvement and joint cash management optimisation for banks and cash-in-transit firms," European Journal of Operational Research, Elsevier, vol. 254(3), pages 1074-1082.
    5. Jason Allen & Walter Engert & Ying Liu, 2007. "A Comparison of Canadian and US Universal Banks: Efficiency, Productivity, and the Role of Technology," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 61-96, January-J.
    6. Jason Allen & Walter Engert & Ying Liu, 2006. "Are Canadian Banks Efficient? A Canada--U.S. Comparison," Staff Working Papers 06-33, Bank of Canada.

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    Keywords

    Automated tellers;

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