I love ATMs
Apr 15 '00
Consumer surveys rank ATM machines second only to microwave ovens on a list of Americans' favorite convenience items. And, really, if you think about it, given some mode of transportation to a convenience store, a person could survive quite nicely in this country with only those two things. One could argue that it is far healthier to harvest or run down one's own food, and more economical too, unless bullets and pesticides would be required. But if we're talking sheer survival, 365 days a year, in all weather conditions, during all possible work and family busy cycles, you just can not beat the ATM/microwave oven combination.
And while some fear microwave ovens impart an unhealthy dose of radiation while nuking our convenience store hot dogs and left over turkey dinners, there is little talk about that hazard now. But while microwaves have lost the power to inflame our passions, ATMs are getting a treatment once reserved for the devil himself.
Memory Lane
Before blasting the little machines, let's think back to life pre-ATM. I clearly recall the time just before ATMs became popular. The year was 1986, the place was Manhattan, and, inconceivable as it is just 14 years later, automatic payroll deposits were rarely an option, even at big companies.
Every other Friday, I spent my entire lunch hour, plus some, standing in line with a few hundred other people waiting to deposit my pay check. And every time I needed cash during the next two weeks, I would have to keep an eye on my watch, make sure to get to the bank before 3 p.m., and wait in line all over again.
On Saturdays, I would have to make sure to get out of the house, drive to town, and find a parking spot before noon if I the family needed cash for the weekend.
Memory Lane, Part II
The scene is Cape May on a Sunday afternoon in summer in the post-ATM era. Tens of thousands of day trippers have joined weekly renters and local residents on the beaches and in the bike rental shops, pancake palaces and sweat shirt shops. At some point in the day fully half of these people realize they need cash for beach badges, lunch at the 50 cent hot dog window, parking, boogie board rentals, aloe or the trip home. They converge on one of the two ATMs in town, and find them – empty.
So predictable was this scene, that the spouse and I took to guessing at what hour the cash dispensers would run dry. The hour was rarely much past 1 p.m. It was slightly amusing to watch hundreds of lobster-toned vacationers toss their "Sorry this transaction can not be completed" receipts on the ground, except on those Sundays when we miscalculated the funds we would need for the weekend and joined the crowd.
No fees equal fewer ATMs
The reason there were only two ATMs for a busy resort town, and relatively few ATMs outside of banks anywhere, was that the machines are expensive to buy and maintain, especially away from a bank's premises. Banks lost money, admittedly a small amount of money, on each non-customer transaction. If banks could not charge non-customers for using the machines, it simply was not economical to put them all over the place.
And much as banks would have loved to charge non-customers, most were afraid to do so. Banks use networks that allow ATMs all over the world to offer banking services to their customers (quite miraculous if you think about it). And the largest and most powerful of these networks, Plus and Cirrus, forbade surcharges.
The furor started in 1996 when Plus and Cirrus reversed their prohibition and allowed members of their networks to impose a surcharge on cash withdrawals. Response was tentative at first as banks, surely realizing they would unleash a storm of protest, gingerly tested the waters. Soon most banks were charging away, most imposing a .50. surcharge. Over the past several years, that amount rose to 1.00, and then to 1.50. Higher charges are levied wherever desperate consumers congregate, including casinos, resorts and airports.
ATMs proliferate
One year after banks were allowed to charge non-customers, the country's ATM population grew 24%. And it keeps on growing. Cape May now has ATMs in all of its convenience stores and at Convention Hall on the boardwalk. No-cash Sundays have ended.
It is now something of a shock not to find an ATM wherever the need for cash arises. That did happen to me just last week, however, and reinforced how much I enjoy, and rely on, the convenience of cash wherever and whenever I need it.
For want of an ATM….
I needed to send a small amount of money to a friend, and decided that the fastest and least expensive way to do that would be to run to an ATM, put cash in an envelope, take it to the Post Office and send it by Priority mail. (And yes I am aware that this is not the safest way to send money, but the amount was small, time was of the essence, and other alternatives were more expensive.) I zoomed to the nearest Post Office, arriving in its neighborhood at about 4:40 and confidently set out to find an ATM. What! No ATM at the gas station, convenience store or pizza parlor. The sole ATM was at a branch of Roma bank, and it was out of order.
We weren't talking life and death, but rather missed opportunity. By the time I realized I wasn't going to find an ATM near the Post Office, it was closed. In my view, more ATMs are better. And the only way to increase put an ATM on every corner is to make them profitable. Without surcharges, an ATM had to be between 3,000 and 6,500 times a month to break even. With fees, the number of daily visits can drop to as few as 500. That means that out-of-the way places that could not support an ATM before, can now. It also means that there can be an ATM on each side of a busy street.
What ATMs cost to run
First banks have to pay a fee to Plus or Cirrus, or to whatever network they use to allow their customers the convenience of banking anywhere on earth. Then they have to lay out money to purchase, maintain and stock each machine. If the machine is off premises, they have to pay rent on the space. ATM non-customer fee opponents put the charge banks at 27 cents, but that amount is only the fee banks pay to their networks, not the cost of purchasing and maintaining the machines. ATMs cost between $7,000 and $48,000, and annual maintenance runs between $12,000 and $48,000 per machine.
American Bankers Association figures put ATM profit margins at between 3% and 5%.
It's my money! Not
My very favorite New Yorker cartoon shows an ancient male bank teller pointing a gun through his window at an equally ancient female customer. "If you deposit, or withdraw, your damn $50 one more time, I'm going to shoot you!" the caption says.
I simply do not get the "How dare they charge me to get at my own money" arguments. This is a hot issue, and obviously there is a sense of entitlement here. But is it not necessary to consider that there are costs involved in taking that money in and dealing it out again, and keeping it safe in the interim? For starters, each teller transaction costs a bank approximately $2.93 and few banks now charge for this service, although they are dying to do so, and probably will find a way before long.
The same customers who use ATMs to withdraw cash most often want to deposit checks at a teller window. Banks had hoped that ATMs would lead to the elimination of tellers, but that hasn't happened. The number of bank tellers has gone down since ATMs were introduced, but only by some 13% or so.
No free lunch
In the early 1970s I worked for an enormous insurance company that paid employees by having guards roll around an iron cart filled with pay envelopes containing actual cash. In those days, theoretically it would have been possible to gain access to cash with no charges whatsoever. And anyone who did not want to earn interest or write checks, and who did not worry about thieves, fires and absentmindedly misplacing a wallet, could have lived life and incurred no fees for the use of his money.
This is not so easy to do now. Turning checks, from employers or others, into cash generally costs something.
And even leaving cash as cash most often carries huge, but hidden, costs. Last weekend, during an impromptu neighborhood gathering, my most frugal friend was lamenting the rate at which cash evaporates. "I can't stand it," she said. "You have a $100 bill, and then you don't have any money! Where does it go?" The entire group commiserated; everyone was familiar with the phenomenon. Break a bill and it is as good as gone.
The ATM is sort of a money rationing system. And while it is smart to anticipate needs and cut down on visits, and charges, who has not taken out a few extra $20s, "just in case," only to find them inexplicable vanished just a day or two down the road?
There are few truly free ATM alternatives. It costs money to write a check. Traveler's checks cost $1 per hundred, and are often a hassle to cash, particularly at grocery stores and gas stations. Yes, most grocery stores will fork over extra cash with a purchase, but generally only in small amounts. Debit cards also most often carry a fee, and you won't get far with one at a hot dog window, beach badge stand, backyard beach parking lot or mom and pop coffee shop.
There is a choice
That said, anyone who does not want to pay an ATM surcharge ever again has a choice. The things will yield to scissors, for one thing, and as far as I know no one is forced to carry one. Cash still is available via teller lines, and at this point is free in many parts of the country. Banks have not cut back hours, in fact in our area the trend is toward late night and Sunday hours, and so the old "get cash at the bank" option is more appealing than it was even a few years ago.
Some ATMs don't carry a fee. Between ATMs linked to a depositor's bank and free ATMs, most people can avoid surcharges most of the time.
Freedom
What is more important than freedom? That is what ATMs impart. No more traveler's checks. No more hours wasted standing in teller lines. No more anxiety about getting away from work or home to squeeze in a bank run before closing time.
I am attached to my microwave oven, but if push came to shove and I had to choose just one of the top consumer convenience devices, I would chuck the microwave and hang onto the ATM. No contest.
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