Bank Atm Surcharges Said No Threat To Competition

Surcharges that large banks in Washington charge noncustomers for using automatic teller machines are not a threat to competition, the U.S. comptroller of the currency says.

In a Feb. 25 letter, Comptroller Eugene Ludwig disagreed with John Bley, director of the state Department of Financial Institutions, who has said the surcharges might be “one step worse than predatory pricing.”

“Given the variety of factors that may affect a consumer’s choice of financial institution, charging a fee to noncustomers for ATM use by itself is likely to have a minimal effect on competition,” Ludwig wrote to Bley.

“It does not appear that the banks’ decision to impose an ATM fee for noncustomers violates the federal antitrust laws.”

Ludwig said a customer’s choice of a bank depends on a number of factors, such as the number of tellers a bank has, its drive-up facilities, hours and the prices it charges.

Bley, who had sought Ludwig’s opinion, dismissed the letter as not terribly important to the debate in Olympia over a bill to temporarily prevent the state’s four largest banks from charging customers of other financial institutions for using the banks’ ATMs. “There’s no beef in this letter,” Bley said. “It lacks substance.”

Rather than respond to Ludwig, Bley said he would concentrate on providing legislators with information about the measure, SB5813.

The bill, sponsored by Sen. Dan McDonald, R-Bellevue, is aimed at the state’s “dominant banking institutions,” defined as those with assets of more than $1 billion and a large share of the ATM market. In effect, it would apply only to Seafirst, Key Bank, U.S. Bank and Wells Fargo, which together control nearly 48 percent of the estimated 4,000 ATMs in the state.

The banks began charging the fees late last year. The surcharges, usually $1 or $1.50 per transaction, are on top of whatever the person’s own bank charges for using another bank’s machine.

The bill is expected to be voted on by the Senate Financial Institutions, Insurance and Housing Committee by the middle of the week, though whether it will pass out is questionable.