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ATM Direct Charging Reform: the Effect of Independent Deployers on welfare

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  • Donze, Jocelyn
  • Dubec, Isabelle

Abstract

Recently in Australia, the interchange fees on shared ATM transactions were removed and replaced by a fee directly set and received by the ATM owner ("direct charging scheme"). We develop a model to study how the entry of independent ATM deployers (IADS) affects welfare under the direct charging scheme. Paradoxically, we show that the entry of IADS benefits banks ! It is also good for consumers if they sufficiently value the ATMs deployed by the independent deployers.

Suggested Citation

  • Donze, Jocelyn & Dubec, Isabelle, 2009. "ATM Direct Charging Reform: the Effect of Independent Deployers on welfare," MPRA Paper 15818, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:15818
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    References listed on IDEAS

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    1. Jocelyn Donze & Isabelle Dubec, 2009. "Paying For Atm Usage: Good For Consumers, Bad For Banks?," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 583-612, September.
    2. Knittel, Christopher R. & Stango, Victor, 2011. "Strategic incompatibility in ATM markets," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2627-2636, October.
    3. Donze, Jocelyn & Dubec, Isabelle, 2010. "The effects of regulating interchange fees at cost on the ATM market," Economics Letters, Elsevier, vol. 107(2), pages 187-189, May.
    4. Matutes, Carmen & Padilla, A. Jorge, 1994. "Shared ATM networks and banking competition," European Economic Review, Elsevier, vol. 38(5), pages 1113-1138, May.
    5. 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.
    6. Donze, Jocelyn & Dubec, Isabelle, 2006. "The role of interchange fees in ATM networks," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 29-43, January.
    7. Brendan Filipovski & Darren Flood, 2010. "Reform of the ATM System - One Year On," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 37-45, June.
    8. Ioana Chioveanu & Ramon Fauli‐Oller & Joel Sandonis & Juana Santamaria, 2009. "Atm Surcharges: Effects On Deployment And Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 613-635, September.
    9. Nadia Massoud & Dan Bernhardt, 2002. ""Rip-Off" ATM Surcharges," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 96-115, Spring.
    10. Knittel, Christopher R. & Stango, Victor, 2011. "Strategic incompatibility in ATM markets," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2627-2636, October.
    11. Darren Flood & Jennifer Hancock & Kylie Smith, 2011. "The ATM Reforms - New Evidence from Survey and Market Data," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 43-50, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Heng Chen & Marie-Hélène Felt, 2022. "Canadians’ Access to Cash Before and During the COVID-19 Pandemic," Discussion Papers 2022-15, Bank of Canada.
    2. Donze, Jocelyn & Dubec, Isabelle, 2009. "La tarification des retraits aux distributeurs automatiques bancaires, une revue de la littérature [ATM withdrawal pricing, a survey of the literature]," MPRA Paper 16546, University Library of Munich, Germany.
    3. Wenzel Tobias, 2013. "Naive Consumers, Banking Competition, and ATM Pricing," Review of Network Economics, De Gruyter, vol. 12(3), pages 271-286, October.
    4. Clare Noone, 2012. "ATM Fees, Pricing and Consumer Behaviour: An Analysis of ATM Network Reform in Australia," RBA Research Discussion Papers rdp2012-03, Reserve Bank of Australia.
    5. Tobias Wenzel, 2014. "Independent Service Operators in ATM Markets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(1), pages 26-47, February.
    6. Markkula, Tuomas & Takalo, Tuomas, 2021. "Competition and regulation in the Finnish ATM industry," BoF Economics Review 8/2021, Bank of Finland.
    7. Magnac, Thierry, 2015. "Foreign fees and customers'cash withdrawals," TSE Working Papers 15-560, Toulouse School of Economics (TSE).
    8. Magnac, Thierry, 2017. "ATM foreign fees and cash withdrawals," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 117-129.
    9. Kopsakangas-Savolainen Maria & Takalo Tuomas, 2014. "Competition Before Sunset: The Case of the Finnish ATM Market," Review of Network Economics, De Gruyter, vol. 13(1), pages 1-33, March.
    10. repec:zbw:bofrdp:2012_032 is not listed on IDEAS
    11. Kopsakangas-Savolainen Maria & Takalo Tuomas, 2014. "Competition Before Sunset: The Case of the Finnish ATM Market," Review of Network Economics, De Gruyter, vol. 13(1), pages 1-33, March.

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    More about this item

    Keywords

    direct charging reform;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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