22 December 2014

Devil's Advocate

Roger Elwell - Yes Please

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Transaction Banking

A community for discussing technology trends, views and perspective in global transaction banking
A post relating to this item from Finextra:

RBS cuts access to rival ATMs

18 August 2011  |  10414 views  |  0
Around one million Royal Bank of Scotland (RBS) account holders will soon be prevented from using cash machines belonging to rival banks.

Charging for Use of ATMs

24 August 2011  |  4835 views  |  3

I think the move to charging certain people for use of other banks' ATMs is deplorable - and we have been here before, only to see it dropped.

Some of us remember that the introduction of ATMs was driven not only by customer convenience, but also by cost cutting initiatives.  It was deemed cheaper to dispense by machine than it was to do so over the counter, so the deployment of ATMs was seen as a powerful profit enhancer at the time.  The banks should be satisfied that they achieved such cost savings (and the permanent boost to their profit line) and view any interchange costs between them as a considerable saving on the old, in-branch method of dispensing cash.

I'd be interested to know what their views are on how the introduction of these charges will skew their ATM traffic and the net effect on their interchange flows.  From what I remember, there was a big push in some banks to extend their networks, because the more ATMs you had, the more other banks' customers used them and the more interchange income they got.  What happened to all that?  Is this no longer the case?

This is really nothing to do with 'recovering costs' charged by other banks.  I recall that many banks were about even on the interchange stakes.  It has, instead, everything to do with extracting more income from customers.  Interesting how they have focused only on one side of the 'business', to justify the introduction of this charge...

There is something repugnant about directly charging people to withdraw their own money from their accounts, especially when the banks are still making so much money out of the float they enjoy from those bank balances, and also especially now they have successfully bombed the interest rates they pay out on such balances.

What next?  Maybe they should start directly charging people (and I mean personal customers here, not businesses) to actually pay in.  Why is there a difference between paying in and drawing out?  Both of them are transactions, after all.  Just think how much they could make if they charged, for example 10p per credit (including automated salaries, etc.) received into an account!

Maybe those affected should register their disapproval by going into branches to withdraw instead, at every possible opportunity, and clog up the counters...

TagsCardsRetail banking

Comments: (3)

Martin Bailey - Temenos - Hemel Hempstead | 24 August, 2011, 17:30

If we are talking about the same financial institution, then the charges will be levied at those customers who have a "basic" account. The owners of these accounts tend to be those that are less fortunate and less credit worthy amongst us. This is just another example of how we make life harder (and sometimes more expensive) for the people at the bottom of the ladder. 

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 25 August, 2011, 15:58

The regulation on 'alien' or 'rival' ATM cash withdrawals swung between the two ends of the pendulum in India over the past year but the state of equillibrium reached recently seems very fair to customers and banks alike: 5 free transactions per month, and a nominal charge for each transaction thereafter. Since this policy is uniformly applicable for all banks and across all types of accounts (on which ATM cash withdrawals are permitted), there is no discrimination against customers at the bottom of pyramid or anyone else. According to personal and anecdotal evidence, branch footfall has dropped significantly since this policy was implemented.   

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Michael Kyritsis - ACI - London | 30 August, 2011, 16:33

Unless I misread it (twice) the original article states that basic account holders will not be able to use other ATMs - i.e. the transaction will be rejected. Which I think is even worse than charging as the cardholder doesn't even have the choice to accept the charge. I suppose some might upgrade their accounts, and some might switch banks.

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Consulting to the financial services industry with a specific expertise in the cards business - issuing and acquiring.

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