ATM Fees Changing People's Habits, Surveys Find

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More Customers Using Debit Cards and Seeking Machines with No Fees

In the three years since automated teller machine fees took root, surcharging has come to dictate when, where, and how consumers get cash, according to a spectrum of public opinion polls.

Consumers say they are going out of their way to find and use machines that do not charge them a fee.

Banks and ATM processing networks are also noticing habit changes, such as heavier use of debit cards at the point of sale, according to surveys.

"People have altered their behavior in response to surcharging, plain and simple," said James Belcher, research analyst at PSI Global, a Tampa, Fla.-based research and marketing firm.

A PSI Global survey of 3,217 consumers in April and May found that 15% have limited their use of ATMs in response to surcharging.

Forty percent said they skirted fees by using only their own financial institution's ATMs, and another 11% said they used only ATMs they knew would not surcharge them.

Most banks charge fees only to noncustomers who use their ATMs, and 23% of the PSI respondents said they use a "foreign" machine only in an emergency.

Of the 397 respondents who said they curtailed their use of ATMs in the last year, 42% said they did so because of high fees. Forty-four percent cited substitution of a debit/check card, and 32% said they used checks instead.

Eighteen percent said they used a debit card and asked for cash back.

Popular attitudes toward surcharging are rising in importance as consumer groups and legislators renew their vitriolic fights against surcharging. Surcharge foes are attempting to tap into people's testy feelings on the subject.

Banks know that the fees are not winning any popularity contests, but they point to polls such as PSI Global's as evidence that consumers can -- and do -- avoid incurring surcharges.

"They're adults, and they are voluntarily making a decision to use or not use another financial institution's ATMs," said Ken Herz, a spokesman for Chase Manhattan Corp.

Surcharging became prevalent in 1996, when Visa U.S.A. and MasterCard International dropped the bans on the practice that they had exercised through their national ATM processing networks, Plus and Cirrus.

After banks began surcharging, nonbank companies began buying ATMs and placing them in retail locations to reap surcharge revenue.

Though consumers have grown accustomed to paying fees for cash access in airports, grocery stores, and elsewhere, they still bristle at the charges, especially when they are getting cash at a bank branch. Anti-surcharge forces call foreign ATM fees "unfair" and characterize them as "double-dipping," but banks say consumers are casting their votes each day when they choose to either use their own bank's ATM, or incur a "convenience fee."

GartnerGroup Inc., a research and consulting firm in Stamford, Conn., polled 257 ATM-owning banks in July and August about the behavior changes they have seen in the wake of surcharging.

Larger banks said surcharging seems to have had a deep influence on customer behavior, while small banks said the practice has made less of a difference.

Among banks with more than $4 billion in deposits that responded to the GartnerGroup survey, 36% said they noticed consumers limiting use of ATMs that surcharge.

Forty-nine percent of these banks said consumers have begun withdrawing larger amounts of cash, and 53% said surcharging has prompted consumers to use debit cards more often.

Among medium-sized institutions -- those with $1 to $4 billion in deposits -- 59% said consumers avoid surcharging, and 38% said customers limit their use of ATMs that assess the fees.

Banks in the GartnerGroup survey with less than $1 billion in deposits said 21% of customers avoid surcharging ATMs. …