As part of a growing call for government regulation of the banking and merchant account industry, several Senators are now espousing the view that a fee limit should be imposed on the ATM machine business.  Three Senators, led by Iowa Democrat Tom Harkin, assert that ATM fees are too high – and are especially problematic for lower- and middle-income Americans.  As such, the senators assert that the cost to withdraw money from ATM’s should be no more than 50 cents.

Senator Harkin chimes in on this issue:

“In recent years, Congress has acted to protect consumers by setting appropriate limits on the types of fees that financial institutions can charge consumers. However, one area that lacks these sensible restrictions is the fees charged to consumers for using Automated Teller Machines (ATMs).  Consumers are being charged ATM fees that are well in excess of the cost of providing services, in some instances, as much as $5 per withdrawal.  These fees are outrageous, are anti-consumer, and they need to be reigned in.”

At present, banks and independent operators of ATM machines set their own fee structure and can charge any amount they deem that the market will bear.  It’s estimated that the average consumer’s cost to withdraw money from a different bank is $3.54 – well beyond the deemed approximate cost of 36 cents to facilitate the transaction.

Banks and especially independent ATM operators who vehemently oppose the Harkin amendment assert that the costs to carry out an ATM machine business transaction are well above the quoted 36-cent figure.  They declare that all their expenses should be considered: Buying the device (which can typically run from $5,000 to $50,000), gasoline expenses to feed the machine money, purchasing parts and providing general upkeep of the device also entail costs.

Nevertheless, some politicians and consumer advocates feel that banks and independent entities should not reap great profit (any profit?) when consumers are simply trying to access their own funds.  In their estimation, by capping ATM fees at 50 cents, owners of ATM machine businesses cannot unfairly gouge prices.

If this amendment comes to pass – and it is presently stalled in the Senate – the ramifications may be far-reaching and perhaps the net outcome, many aver, will not help consumers at all.  Consider what a price cap may do to the ATM machine business itself?  In the absence of any meaningful profit, many banks and independents may simply provide less ATMs in neighborhoods.  While it may appear that there is a glut of these devices now, a steady contraction may render many communities without a nearby ATM machine.  Those devices that remain may be less sophisticated as enhanced technology costs money.

Moreover, if banks are to receive less revenue from outside ATMs, they can find other ways to make up the difference.  For example, they can impose a general fee for ATM use to their entire customer base.  In contrast, independents would not be able to accrue another stream of revenue and may be forced out of business.

Many consumers seem divided on the issue, too.  While those applaud a financial ATM cap (embracing the notion that a buck saved is a buck earned), others are truly concerned about price setting as it relates to our capitalist economy.  This camp believes that consumers have choices and they don’t need to withdraw money from certain ATMs if they want to avoid an expense.

I read where one forum member posted in a tongue and cheek manner that popcorn at movies seems way over-priced.  Popcorn comes from corn, he added, grown in Iowa, and as such, price limits should be set on popcorn and Iowa corn.  He wondered where price setting ends?  It may very well begin with the ATM machine business.