Prediction: ATM fees hit $10/transaction by end of Dec, 2008

The SMH reports that the Reserve Bank is changing the way ATM fees are charged: instead of the owner of the ATM charging the user’s bank, and the user’s bank then charging the user, the owner of the ATM will charge the user directly.

UPDATE: this other article does explicitly state it’s the RBA forcing this change.

(NB: The article doesn’t explicitly state that it’s the RBA forcing this change; I’m making that claim based on my own understanding of how the banking system works, and inferring that I’m correct from some remarks near the end of the article. Any fault is mine, not theres – please feel free to offer corrections)

END UPDATE

The Reserve Bank of Australia predicts competition between banks will drive down or eventually abolish the fees.

I call bullshit. In circumstances where there is actually competition, sure – there may be some downward pressure on prices – just as having two petrol stations across the road from each other puts a downward pressure on prices, preventing either of them from artificially inflating prices around long weekends and holidays. Wait, something in that last sentence didn’t quite sound right… hrm…

In places where there is no competition though, prices are only going to be going in one direction, and it’s not down. Typical scenario: the single ATM wedged up the back of your favorite night spot. If you’ve got a choice between paying $10 to take money out, or leaving the club, walking 500m up the road and back, and then waiting 30 minutes to get back into the club – $10 doesn’t seem such a hefty fee[2]

Within the last week, I heard someone[1] from the US relating an experience where an ATM in such a location had charged a $20 fee. I fully expect the same to happen here.

[1] It was Keith, of Keith and the Girl, but don’t ask me for the exact podcast.

[2] Admittedly, there are other forms of competition that may kick in here; for instance, assuming a selection of several near-identical clubs differing only in the price charged by the in-club ATM, it would be unsurprising if the club with the cheapest ATM was more popular. I can’t think of anywhere where this situation is anything other than highly theoretical though.

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