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Fees and Surcharging in automatic teller machine networks: Non-bank ATM providers versus large banks

  • Elizabeth W. Croft
  • Barbara J. Spencer

This paper develops a spacial model of ATM networks to explore the implications for banks and non-banks of interchange fees, foreign fees and surcharges applied to transactions by customers at other than an own-bank ATM. Surcharging raises the price (foreign fee plus surcharge) paid by customers above the joint profit-maximizing level achieved by setting the interchange fee at marginal cost and not surcharging. Similar size banks would agree not to surcharge, but such an agreement is typically not possible between a bank and a non-bank. A high cost of teller transactions modifies the tendency towards high ATM fees.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9883.

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Date of creation: Aug 2003
Date of revision:
Handle: RePEc:nbr:nberwo:9883
Note: IO
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  1. James J. McAndrews, 1998. "ATM surcharges," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 4(Apr).
  2. Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-23, March.
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