Paying for ATM usage : good for consumers, bad for banks ?
We compare the effects of the three most common ATM pricing regimes on consumers’ welfare and banks’ profits. We consider cases where the ATM usage is free, where customers pay a foreign fee to their bank and where they pay a foreign fee and a surcharge. Paradoxically, when banks set an additional fee profits are decreased. Besides, consumers’ welfare is higher when ATM usage is not free. Surcharges enhance ATM deployment so that consumers prefer paying surcharges when reaching cash is costly. Our results also shed light on the Australian reform that consists in removing the interchange fee.
|Date of creation:||16 Sep 2008|
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- Knittel Christopher R. & Stango Victor, 2008.
"Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 8(1), pages 1-42, January.
- Christopher R. Knittel & Victor Stango, 2004. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," NBER Working Papers 10962, National Bureau of Economic Research, Inc.
- Christopher Knittel & Victor Stango, 2005. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," Working Papers 532, University of California, Davis, Department of Economics.
- Knittel, Christopher R. & Stango, Victor, 2005. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," Department of Economics, Working Paper Series qt3d42z9rh, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Christopher R. Knittel & Victor Stango, 2004. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," Working Papers 04-06, NET Institute, revised Oct 2004.
- Knittel, Christopher R., 2004. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," Santa Cruz Department of Economics, Working Paper Series qt4z54r2s3, Department of Economics, UC Santa Cruz.
- James J. McAndrews, 1998. "ATM surcharges," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 4(Apr).
- Mcandrews James J., 2003. "Automated Teller Machine Network Pricing - A Review of the Literature," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-13, June.
- Christopher R. Knittel & Victor Stango, 2009. "HOW DOES INCOMPATIBILITY AFFECT PRICES?: EVIDENCE FROM ATM'S -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 557-582, 09.
- Nadia Massoud & Anthony Saunders & Barry Scholnick, 2006. "The Impact of ATM Surcharges on Large versus Small Banks: Is There a Switching Effect?," The Journal of Business, University of Chicago Press, vol. 79(4), pages 2099-2126, July.
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