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I am surprised someone in the banking journalism field was confused about ATM fees.

I was a little surprised that someone in the banking journalism field was confused about ATM fees Just Thinking, July 2001. So I will try to give you my perception of what they are about.

Most banks do not charge and ATM fee if you use "their own" ATM machines.

An ATM fee is NOT a fee for accessing your own money. An ATM fee is a fee for using some other bank's machine to get cash. It has cost that bank money to purchase and install that machine and it costs them money to maintain it and keep it filled with cash. It costs to be a member of a nationwide or worldwide "switching" company. It costs them opportunity costs in lost funds for the cash that is in that machine. So it is only fitting that they be able to recoup those costs to some degree when non-customers use their machines.

Now, some have argued that having access to a wide array of ATM machines benefits a bank's customers by giving them many more locations at which to use their cards. Therefore banks should not charge any fees because the wide network helps a bank promote its own ATM cards.

However, this wide network of ATMs is only valuable to a bank in regards to its own customers. Non-customers using their machines provides no benefit to the bank at all.

If the competitive advantage for a bank to have a wide network of ATM machines available for its customers was strong enough many banks would have already gone to the no fee strategy. It is obvious that this advantage does not provide a strong enough basis for waiving all fees. Some fee income is needed to make ATM networks economically feasible.

Another indirect factor in ATM fees is the changing nature of banking.

There was a time when, if you wanted to make a deposit or get a loan, you could only go to your bank. Now banks face competition from numerous fronts. Stock companies want your customers, Macy's wants your bank's customers, The Money Store wants your customers, everyone wants your customers.

The problem is that none of them are regulated and taxed the way a bank is. Credit unions, for example, are direct competitors that have been given more and more powers to provide bank services but continue to pay no taxes.

The point is, with all this competition banks have had to find ways to produce more fee type income and ATMs are one way of doing that. So the pressure on banks to maintain ATM fees is high.

In closing, I point out your one important remark in your article, that you don't mind paying a small fee to be able to access money (although it's not your money-at least not at first) anywhere you happen to be. I believe most people truly feel this way.


Dennis Irvine

Plumas Bank

Quincy, Calif.

[email protected]

Belated thanks for including WMCMortgage in your July 2001 cover story,"Open Skies."

Having devoted our energies and resources to Web-based technology solutions, it is gratifying to see these efforts receive validation from a respected technology publication, as well as being mentioned alongside the GSEs.

Both Scott McAfee and James Walker were very pleased by your reporting.

Great job!

Frank Harper

WMC Mortgage Corp.

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