ATM users received a bit of bad news late Tuesday as the U.S. Senate blocked an amendment that would limit ATM fees to 50 cents.

The amendment, first proposed by U.S. Sen. Tom Harkin (D-Iowa) on May 4, has not been voted on by the legislature. When Harkin tried to bring up the measure on the Senate floor late Tuesday, lawmakers blocked his attempt.

What it means for consumers, banks

Without this amendment, the public would not see any changes to the ATM system currently in use.

The proposed piece of law would limit ATM fees to a maximum of 50 cents, which is less than one-fifth of the current $2.66 national average. This would, of course, be good for customers and bad for banks both big and small. According to Harkin, an average ATM transaction costs a bank about 37 cents, meaning financial institutions would still make a small amount of money on each transaction. If the amendment passed, banks would profit 35% on each ATM use. At the current national average, banks score a profit of more than 700% on each transaction.

Banks argue that without the extra incentive provided to them by higher ATM fees, they would not be able to provide as many ATMs, making things less convenient to customers.

Why lawmakers blocked the amendment

Harkin’s proposal was opposed by members of both political parties — Democrats because of their rush to finish up the financial overhaul bill and Republicans because of their hesitance to interfere with financial institutions.

Some of the Senate’s liberal Democrats have argued they have not been given enough time to add amendments to the financial reform bill, according to The Wall Street Journal. At the same time, moderate Democrats and Senate leaders are trying to finish up the bill as soon as possible.

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  • Gianni D.

    This is terribly incorrect, researched very poorly, and completely incorrect.

    First, transactions are not 37 cents, the statistics used are from 1997.

    Secondly, though that may be the marginal rate (albeit a wrong figure to begin with,) the ACTUAL rate incurred is much higher, roughly 2.00 per transaction to process a transaction based on average volume, overhead such as insurance, security service to fill the machine, wireless internet processing, maintenance, repair, obvious consumables like receipt paper, depreciation, and of course opportunity cost of capital (banks lend money on an interest rate, banks tie up capital, upwards to 300K per machine on a weekly basis just to offer it for free!) To give banking customers free withdrawals banks MUST offset the actual TRUE cost of 2.00 per transaction with non-banking clients. Furthermore, some fees actually may be higher. Weekend visits by Brinks are at least 250$ just for a diagnostic with a machine malfunction. If that happens 4 times per month which is about average as well, the bank would need at LEAST 400 transactions @$2.50 just to break even (FROM NON BANKING CUSTOMERS)

    If the fee cap went on, 350,000 of the 482,000 atms available would be pulled out immediately as they would be 100% nonprofitable. 68% of ATMs are owned by independent operators who would have no incentive to keep their businesses open. Hundreds of thousands of jobs including industries like private armored car companies would be lost. What about technicians, suppliers, manufacturers, and the incentive of creating new ATMs (not only dispensing cash, but things like every day items, etc). This would kill innovation completely.

    Since when can congress cap fees on convenience? We're selling money at the right time and the right place. I paid 3.50 for a soda from a Vending Machine outside my Vegas hotel room. I didn't care, I chose to buy it at the price. If there's not enough demand, prices will drop, or machines will be pulled. Supply and Demand run this market. The government doesn't cap fees on hot dogs just because the hot dog stand guy was clever enough to find a busy intersection. Price Control = the first step towards socialism. Banks have to make money SOMEHOW to offset the costs basically of protecting your assets in a vault–since when is a profit illegal to make? What's wrong with a profit? What's wrong with this country? If you don't want to pay for it, have the discipline to go to your own bank. Better yet, if you don't like banking fees, then put your money in your mattress. Have Fun with that one.

    By The way, I have a BA in Economics, and worked previously at Merrill Lynch, Smith Barney, and AXA Equitable and am fully licensed to sell securities. I also own an ATM Business, and I actually know the true cost of how this business works. Please do your research next time before posting articles on the WWW.

  • Jake

    Gianni, the Senate did not pass the amendment – your ATM business is safe!

  • Gianni D.

    This is terribly incorrect, researched very poorly, and completely incorrect.

    First, transactions are not 37 cents, the statistics used are from 1997.

    Secondly, though that may be the marginal rate (albeit a wrong figure to begin with,) the ACTUAL rate incurred is much higher, roughly 2.00 per transaction to process a transaction based on average volume, overhead such as insurance, security service to fill the machine, wireless internet processing, maintenance, repair, obvious consumables like receipt paper, depreciation, and of course opportunity cost of capital (banks lend money on an interest rate, banks tie up capital, upwards to 300K per machine on a weekly basis just to offer it for free!) To give banking customers free withdrawals banks MUST offset the actual TRUE cost of 2.00 per transaction with non-banking clients. Furthermore, some fees actually may be higher. Weekend visits by Brinks are at least 250$ just for a diagnostic with a machine malfunction. If that happens 4 times per month which is about average as well, the bank would need at LEAST 400 transactions @$2.50 just to break even (FROM NON BANKING CUSTOMERS)

    If the fee cap went on, 350,000 of the 482,000 atms available would be pulled out immediately as they would be 100% nonprofitable. 68% of ATMs are owned by independent operators who would have no incentive to keep their businesses open. Hundreds of thousands of jobs including industries like private armored car companies would be lost. What about technicians, suppliers, manufacturers, and the incentive of creating new ATMs (not only dispensing cash, but things like every day items, etc). This would kill innovation completely.

    Since when can congress cap fees on convenience? We're selling money at the right time and the right place. I paid 3.50 for a soda from a Vending Machine outside my Vegas hotel room. I didn't care, I chose to buy it at the price. If there's not enough demand, prices will drop, or machines will be pulled. Supply and Demand run this market. The government doesn't cap fees on hot dogs just because the hot dog stand guy was clever enough to find a busy intersection. Price Control = the first step towards socialism. Banks have to make money SOMEHOW to offset the costs basically of protecting your assets in a vault–since when is a profit illegal to make? What's wrong with a profit? What's wrong with this country? If you don't want to pay for it, have the discipline to go to your own bank. Better yet, if you don't like banking fees, then put your money in your mattress. Have Fun with that one.

    By The way, I have a BA in Economics, and worked previously at Merrill Lynch, Smith Barney, and AXA Equitable and am fully licensed to sell securities. I also own an ATM Business, and I actually know the true cost of how this business works. Please do your research next time before posting articles on the WWW.

  • factchecking

    Actually, businesses are hypocrites, they want money from the ATM fees and love to gouge consumers, and they don’t want to accept credit cards and debit cards but know they will lose business so they resort to doing this , ever go to a restaurant that does not take credit or debit cards but has an ATM, you know the deal and the business collects the rent. Cash itself is not free due to armored cards, theft, etc but this a backdoor way for the business to get around and have regular business that take the cards subsidize them.