San Francisco has become the first major city in the nation to ban ATM surcharges, the fees banks charge noncustomers for using their machines.
Consumer groups say the San Francisco ban will spark a nationwide backlash against ATM fees.
Under the voter initiative in Tuesday's election, banks could not charge noncustomers a fee for using their automated teller machines. More than nine out of 10 banks require such fees, according to the U.S. Public Interest Research Group, a D.C. consumer advocacy organization.
Santa Monica, Calif., Iowa and Connecticut have passed legislation for similar bans, but the high-profile San Francisco decision, made by the voters in a referendum instead of the city council or state regulators as in other cases, has received more media - and perhaps political - attention.
"It may ratchet up the political visibility of this issue. Before it was a dispute between regulators," said Arthur Wilmarth, a George Washington University law professor who specializes in banking regulation.
"There have been certain moves on Capitol Hill to try to bring surcharges under regulations, but they haven't gone very far," Mr. Wilmarth said.
Former Senate banking committee Chairman Alfonse M. D'Amato, New York Republican, introduced legislation banning surcharges in September 1998, but it was defeated.
Though federal lawmakers and San Francisco residents have taken action, they are the exception, Mr. Wilmarth said.
"I haven't seen indication of a nationwide movement . . . [But] a lot of trends start in California," he said.
The California Bankers Association promptly filed for an injunction in federal court against the San Francisco initiative, which would go into effect in early December.
Consumers and consumer groups have attacked rising surcharges since 1996, when ATM network operators began allowing banks to use them. Before that decision, banks could charge their customers for using another bank's machine. Since then, consumers often are charged twice - by their bank (an "off-us" fee) and by the bank operating the ATM (a surcharge).
The 300 largest banks in the United States required $1.35 in surcharges per noncustomer ATM visit this year, according to the Public Interest Research Group (PIRG). That is in addition to the $1.27 off-us fee customers' own banks charge, so withdrawing money from another bank's ATM machine would cost an average of $2.62.
"It's pretty silly and I wish they wouldn't [charge fees]," said Sean Perry, a D.C. resident and Bank of America customer who was withdrawing cash from an ATM at Massachusetts Avenue and Seventh Street NW yesterday afternoon.
"I assume it's just a money-making thing from the banks. …