ATM networks emerge
February 24th 2009 06:54
Alliances are being finalised in the automatic teller machine market, ready for the shift in pricing known as the convenience fee.
The trigger is the pricing reform under way in Australia and also in New Zealand, and a chance to consider the business goals of one work-a-day sector of banking operations.
Westpac, Cashcard and credit union and building societies are striking agreements with owners of small ATM fleets – mainly small banks – and working out fee-free arrangements for the use of each other’s ATMs.
From Tuesday of next week “foreign” ATM fees are on the way out and “convenience” ATM fees are on the way in.
The key shift is that ATM owners instead of banks collect the fees. This is all in the name of ditching the interchange fees charged between ATM owners (the so-called hidden) fee) and which vary a lot between ATM owners and have proven inflexible.
Since banks own most ATMs this is no great impact on revenues for the sector.
For one bank it is an opportunity. Westpac has attracted GE, HSBC, Members Equity Bank and a dozen others to share ATM machines, and to maximise the "fee free" option for customers. Westpac is the most successful of those following this path.
The rediATM network of credit unions and building societies is confirming terms with longstanding customers and hunting for others. AMP Bank picked the CUBS network as its choice. Cuscal said last week it aimed to double the number of ATMs under the rediATM banner.
Commonwealth Bank gets to rope in the BankWest machines as part of its fee-free network.
ANZ and NAB have not, so far, struck any agreements of note to share ATM networks as part of the reform.
Doubtful convenience rises under ATM reforms
24 February 2009 6:56am
There’s one thing to be said for the ATM convenience fee.
You can’t really call it convenient.
At present a typical consumer faces the chance that 75 per cent or more of ATMs they might want to use belongs to someone else, and generates extra fees.
From March the chance of striking the wrong machine will decline for those drawn within the Westpac, Cashcard and rediATM networks. So, that is an increase in convenience.
The basic, wrong-bank ATM fee will, for now, stay at $2. The owner of the machine and not the card issuer will collect this fee.
Many banks look like maintaining a second, wrong-bank fee. NAB set the pricing at 50 cents, a decision that goes against the thinking behind the reform. Westpac and ANZ followed, though Commonwealth has said it won’t charge this fee.
On Friday the governor of the Reserve Bank of Australia, Glenn Stevens, told a parliamentary committee that the cost of switching and reconciling a transaction on the part of a bank was "at most 10 cents".
Stevens said the RBA estimated the average unit cost of an ATM transaction was around 75 cents.
So ATM fees look like going up under convenience fees, and the margin to ATM owners looks like being in excess of 100 per cent, at least at the start.
If there’s any competition in the sector ATM fees might fall at high traffic locations, and they deserve to.
The trouble for the sector, and reforms agreed to by banks and ATM owners under prodding from the Reserve Bank, is that there’s an antiquated payments machine whirring in the background, owned by banks who prefer to extend the life of what they have, given the costs of doing anything new.
This means that access is exceptionally difficult, and this is the real barrier to any innovation among ATM payments.
Two new switches overcame the hurdles in recent years and secured entry: Strategic Payments Systems and Woolworths. MoneySwitch (trading as Tyro Payments) also gained access, though it operates in a limited niche unrelated to the ATM sector.
SPS is the backbone of Customers’ ATM machines and Woolworths will be switching its own ATMs. So there’s a couple of low-cost operators angling for an opportunity.
Some operators are better positioned than others in locations where the choice of ATMs is low and the demand pretty high. Think pubs and clubs. This is the chief niche of Customers Limited.
The option of a grand sharing of ATMs, and for the convenience of customers, never really featured in industry discussions over “reform”.
Cashcard and Customers tinker with brands
24 February 2009 6:51am
Two more brands will be added to the crowded ATM market.
Cashcard will apply the Feesmart label to some of its fleet. Cashcard is seeking small owners of ATMs to negotiate fee-free arrangements, though the only public agreement so far is with Bank of China.
Customers is introducing machines labelled Multibank, of which it has fewer than a dozen in place at the moment.
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The trigger is the pricing reform under way in Australia and also in New Zealand, and a chance to consider the business goals of one work-a-day sector of banking operations.
Westpac, Cashcard and credit union and building societies are striking agreements with owners of small ATM fleets – mainly small banks – and working out fee-free arrangements for the use of each other’s ATMs.
From Tuesday of next week “foreign” ATM fees are on the way out and “convenience” ATM fees are on the way in.
The key shift is that ATM owners instead of banks collect the fees. This is all in the name of ditching the interchange fees charged between ATM owners (the so-called hidden) fee) and which vary a lot between ATM owners and have proven inflexible.
Since banks own most ATMs this is no great impact on revenues for the sector.
For one bank it is an opportunity. Westpac has attracted GE, HSBC, Members Equity Bank and a dozen others to share ATM machines, and to maximise the "fee free" option for customers. Westpac is the most successful of those following this path.
The rediATM network of credit unions and building societies is confirming terms with longstanding customers and hunting for others. AMP Bank picked the CUBS network as its choice. Cuscal said last week it aimed to double the number of ATMs under the rediATM banner.
Commonwealth Bank gets to rope in the BankWest machines as part of its fee-free network.
ANZ and NAB have not, so far, struck any agreements of note to share ATM networks as part of the reform.
Doubtful convenience rises under ATM reforms
24 February 2009 6:56am
There’s one thing to be said for the ATM convenience fee.
You can’t really call it convenient.
At present a typical consumer faces the chance that 75 per cent or more of ATMs they might want to use belongs to someone else, and generates extra fees.
From March the chance of striking the wrong machine will decline for those drawn within the Westpac, Cashcard and rediATM networks. So, that is an increase in convenience.
The basic, wrong-bank ATM fee will, for now, stay at $2. The owner of the machine and not the card issuer will collect this fee.
Many banks look like maintaining a second, wrong-bank fee. NAB set the pricing at 50 cents, a decision that goes against the thinking behind the reform. Westpac and ANZ followed, though Commonwealth has said it won’t charge this fee.
On Friday the governor of the Reserve Bank of Australia, Glenn Stevens, told a parliamentary committee that the cost of switching and reconciling a transaction on the part of a bank was "at most 10 cents".
Stevens said the RBA estimated the average unit cost of an ATM transaction was around 75 cents.
So ATM fees look like going up under convenience fees, and the margin to ATM owners looks like being in excess of 100 per cent, at least at the start.
If there’s any competition in the sector ATM fees might fall at high traffic locations, and they deserve to.
The trouble for the sector, and reforms agreed to by banks and ATM owners under prodding from the Reserve Bank, is that there’s an antiquated payments machine whirring in the background, owned by banks who prefer to extend the life of what they have, given the costs of doing anything new.
This means that access is exceptionally difficult, and this is the real barrier to any innovation among ATM payments.
Two new switches overcame the hurdles in recent years and secured entry: Strategic Payments Systems and Woolworths. MoneySwitch (trading as Tyro Payments) also gained access, though it operates in a limited niche unrelated to the ATM sector.
SPS is the backbone of Customers’ ATM machines and Woolworths will be switching its own ATMs. So there’s a couple of low-cost operators angling for an opportunity.
Some operators are better positioned than others in locations where the choice of ATMs is low and the demand pretty high. Think pubs and clubs. This is the chief niche of Customers Limited.
The option of a grand sharing of ATMs, and for the convenience of customers, never really featured in industry discussions over “reform”.
Cashcard and Customers tinker with brands
24 February 2009 6:51am
Two more brands will be added to the crowded ATM market.
Cashcard will apply the Feesmart label to some of its fleet. Cashcard is seeking small owners of ATMs to negotiate fee-free arrangements, though the only public agreement so far is with Bank of China.
Customers is introducing machines labelled Multibank, of which it has fewer than a dozen in place at the moment.
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