Avoiding ATM Fees (ATM Direct charging)

New Reserve Bank of Australia policies regarding ATM fees went into effect on 3 March 2009. These formed part of a reform package intended to encourage more competition in the provision of ATM services and to improve transparency in the disclosure of ATM fees, particularly before the system slaps the fees on your bank account.

Direct charging

One new policy allows the ATM owner to charge ATM fees directly to the cardholder for making ATM transactions such as cash withdrawals or balance enquiry. Before collecting such a fee, the owner is obliged to disclose the amount of such ATM fees, and ask the cardholder if he or she wants to continue. There should be no charges if the cardholder decides cancel the transaction.

Theoretically, the ATM owner can levy this direct charge on all types of cardholders using its machines, both its own cardholders and those of other institutions. In practice, direct charging of ATM fees is applied only on outside cardholders using the ATM for their transactions -- which are 'foreign' to the owner.

Foreign ATM fees

Prior to the reform, if you made a transaction using another bank's ATM, your bank had to pay the other bank an interchange fee. Your bank then turned around and charged you this fee plus a bit more for itself. These 'foreign' ATM fees were not disclosed at the time of the transaction; you'd only know about them if you reviewed your statement at month's end.

The new policy has eliminated the interchange fee, thus foreign ATM fees should also go down, if not disappear altogether. The RBA believes such fees are starting to fall and advises cardholders to shop around for ATM fees-free deals from major banks and smaller institutions. Independent deployers of ATM networks can now charge $1.50 or even as low as $1.00 on transactions that used to cost $2.00 to $2.50.

Despite the reforms, consumer groups still worry there are occasions when only one ATM is present for various reasons such as limited geographical access, or inside venues and licensed premises, etc. The virtual monopoly or captive market situation might result in exorbitant ATM fees.

Avoiding ATM fees

The proven way to avoid ATM fees is to use only the machines deployed by your own bank or financial institution. This is still true, so try using your bank's network as much as possible. The institution's website should be able to show the locations of their ATMs in your area. In some cases, institutions also use SMS to help you find their ATMs.

If you need to pay for purchases, you can always use a widely accepted debit card or EFTPOS to avoid the need to withdraw cash; another good alternative would be internet banking or phone banking. A debit card offers you superior advantages than EFTPOS so it is good to keep a debit card handy.

EFTPOS can be of help, however, if you need extra cash. You can use it to get additional cash-backs when paying for purchases at the supermarket.

If you can't avoid transacting through a foreign ATM, withdraw larger amounts so you'll have less frequent need for cash and thus pay fewer fees. And remember, the screen will display the corresponding ATM fees; if you think it is too much, you can cancel the transaction.

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