The Reserve Bank of Australia (RBA) says consumers are voting with their feet in response to the recent reforms of ATM fees.
RBA assistant governor of financial system Philip Lowe says the reforms of ATM fees, which came into affect on March 3, have increased competition and benefitted consumers.
Dr Lowe said that across the entire system most cardholders were paying no more for ATM transactions than previously and some “may have the opportunity to play less”.
“While it is still early days, the competitive forces are playing out broadly as expected,” Dr Lowe told the Cards and Payments Australasia conference in Sydney on Tuesday.
The RBA’s liaison so far found some ATM owners had reported a decline in the number of withdrawals from their machines, once consumers were reminded of the costs associated with the transaction.
“We will get a better picture of how extensive this change has been in a few weeks time, when banks and others report their ATM statistics to the Reserve Bank for the month of March,” Dr Lowe said.
Dr Lowe said fears some ATM owners would impose exorbitant fees in locations where there was limited competition has “not been borne out”.
The RBA reforms gave ATM owners the ability to directly charge customers who used their machines.
The cost using the ATM is displayed on the screen, with the customer able to decline the transaction if they deem the charge too high.
The reforms did not mandate the removal of the so-called foreign ATM fees – what a bank charges its customers for using an ATM outside its own network.
However, the big four banks have all removed the foreign fee charge, with two major banks forced to scrap plans to retain the fee following what Dr Lowe described as a “swift reaction by these banks’ customers”.
“This is a welcome development and is a good example of the competitive process at work and the power of consumer reaction,” Dr Lowe said.
Dr Lowe said while the RBA had no authority to force banks to remove the foreign ATM fees, he described the case for retaining them as weak given it cost less than 10 cents a transaction.
“While we recognise that the setting of foreign fees is ultimately a matter for each bank, our view is that the system will work better without these fees, and that the case for them is weak,” Dr Lowe said.
Dr Lowe said the reforms would also support industry players and deliver both more choice and more convenience to consumers.
“The industry is on a much sounder foot than it was previously,” Dr Lowe said.
“Now that ATM owners can determine their own prices within the context of a competitive marketplace, they have an increased incentive to innovate and to grow their networks.”