CHARLOTTE, N.C. — In move that surprised many industry analysts, Bank of America has begun raising the fee for non-depositors to use many of its ATMs.

The bank has announced that the fee for non-depositors using its ATM machines in most major U.S. markets has gone from $2 to $3.

The fee change began on July 31 and is being phased in across the nation in the coming month. The fee change will only apply to Bank of America ATMs in branches rather than those placed in shopping malls, airports, convenience stores and other public locations, the bank said.

According to bankrate.com, an Internet site which tracks bank fee data, Bank of America last raised ATM fees two years ago from $1.50 to $2.00. In media reports bank spokespersons have justified the change in light of the addition of check imaging machines and other improvements the bank has made to its ATMs.

Reactions to the news across the credit union part of the ATM industry included optimism at seeing another clean cut opportunity to further differentiate credit unions from banks and concern that BofA's move will continue to drive down the use of ATMs generally.

“On this side of the question, all I can say is that we continue to beat the stuffing out of transaction volumes,” quipped Jim Hanisch, executive vice president with CO-OP Financial Services, the parent CUSO of the of the credit union-owned CO-OP Network of fee-free ATMs. “And this really cannot help.”

Hanisch and other industry executives, both within and without the credit union industry, estimate that ATM fees generally are already too high and that they have become a sharp disincentive for the general public to use ATMs. It is a case of the ATM industry strangling their own goose, they argue, because every increase in ATM fee trains another segment of the public to seek out point of sale terminals to obtain cash or just to stop using cash at all for most things.

The most recent Dove Consulting ATM study, which was sponsored by four leading ATM industry organizations, including CO-OP, documented the trend. As of September 2006, the report found that between 2004 and 2006 deployers' average number of monthly transactions per on-premise ATM fell from 4,216 to 3,651, representing an annual decline of 7%. Similarly, per-ATM transaction volumes for off-premise ATMs decreased at an annual rate of 8%, from 2,123 in 2004 to 1,807 in 2006.

The report also found that as per-ATM transaction levels decline and the percentage of foreign acquired transactions stagnates, the number of foreign acquired transactions per ATM, the number of transactions that produce revenue for deployers in the form of surcharge fees and interchange fees, has been decreasing.

“This trend means that, in the absence of a surcharge-rate increase, deployers' direct revenues per ATM are declining–and by extension, deployers' profit margins are being increasingly squeezed,” the report noted.

Hanisch and others predicted as well that the BofA move would signal to other financial institution ATM deployers that they too can raise fees–although they might not raise them as much as Bank of America has.

But Jim Park, CEO of Florida based Credit Union 24, downplayed the fee impact on ATM use overall, though he acknowledged that the Bank of America move could start a trend of fee increases.

“I don't think fees, by themselves, are going to end the use of ATMs, at least not in our lifetimes,” Park said. “What I think the Bank of America move does is offer us a golden opportunity to make another case for why credit unions' nonprofit approach is different from that of banks and better for the consumer.”

In this Park picked up on a theme Hanisch had annunciated as well–credit unions need to stop hiding the advantages of being not-for-profit cooperatives from consumers.

He pointed out that members of credit unions who use CO-OP have access to over 25,000 surcharge-free ATMs around the country while Bank of America can only provide its customers with 17,000 ATM locations.

Hanisch further noted that 6,000 of the CO-OP locations accept deposits from members of CO-OP affiliated CUs, and that this did address the phenomenon of shared branching.

“I think the advantages of being a cooperative in terms of things like ATM access and ATM fees remains one of the best kept secrets about credit unions,” Hanisch said.

Park agreed, noting that its affiliation with ISOs has meant the Credit Union 24 can offer credit union members access to over 100,000 ATMs, many of whom belong to the network's CU Here surcharge-free program.

“The fact is that no matter what Bank of America or any of the banks do, there is no reason a person anywhere right now has to pay an ATM fee,” Park said. “We as an industry just have to work harder to make sure more people know that.”

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