ATM reforms
 When you use an ATM in Australia that doesn't belong to your bank

Overview

From 3 March 2009, there will be a significant change in the way bank customers pay for certain ATM transactions. The change affects the way customers are charged for using ATMs in Australia that don’t belong to your bank – a ‘foreign ATM transaction’.

ATM direct charging is an industry initiative undertaken in response to the Reserve Bank of Australia’s demand that ATM reform principles be voluntarily implemented. It was always clear that failure to voluntarily implement would result in regulation.

Direct charging at ATMs starts on 3 March 2009. These changes only affect transactions where a bank customer uses an ATM owned by another institution¹ - this is known technically as a foreign ATM transaction.

What is a foreign ATM transaction? 

Currently, when a bank customer makes a ‘foreign ATM transaction’, the customer typically pays a foreign ATM transaction fee. This fee covers a charge from the ATM owner, a charge from your financial institution or other card issuer for processing the transaction and other costs. This fee is recorded on the customer’s monthly account statement. The fee is charged by the customer’s own bank, the ATM owner has no capacity to charge the customer directly.

How ATM fees apply now

Today, most customers are charged by their bank when they use a foreign ATM. This fee covers a charge from the ATM owner and other costs.


Source: APCA brochure ‘See the Fee’

Direct charging lets you know upfront how much you will be charged by the ATM owner for making a foreign ATM transaction. You can then choose whether to use the ATM and pay the fee shown, or cancel the transaction at no charge and go to another ATM.

What is changing?

As of March next year, however, the ATM owner will be able to directly charge the customer. The customer’s bank, building society, credit union or other card issuer (for example, American Express) that provide the card used for the foreign ATM transaction, and manages the customer’s account, may also charge a fee or continue to charge a fee.

After you key in your PIN, you will be shown how much the ATM owner will charge you to use the ATM. Then you will be asked if you want to continue with the transaction:

Why are these changes being introduced?

ATM direct charging is an industry initiative undertaken in response to the Reserve Bank’s  demands that ATM reform principles be voluntarily implemented. While the Reserve Bank  showed tolerance in the timing of implementation, it was always made clear that failure to  voluntarily implement would result in regulation.
 
To read more about payments system reforms visit the Reserve Bank’s website:  http://www.rba.gov.au/PaymentsSystem/

What are the Trade Practices implications of this reform?

One of the technical aspects of this reform is that it involves an agreement to set the ATM  interchange fee to zero.
 
Because the interchange fee is deemed a price, any multilateral agreement to change this fee might technically breach the Trade Practices Act (TPA). We say ‘technical’ because competition law is traditionally more concerned with agreements that increase prices, not decrease them to zero.
 
So, in order to facilitate the reform without risking breach of the TPA, the Reserve Bank has  agreed to use its powers under the Payments Systems Regulation Act 1998 to enable the  agreement to take effect.

Where can I learn more?

The education campaign is being coordinated by the Australian Payments Clearing Association  (APCA). Banks, credit unions, building societies and independent deployers of ATMs have been  involved in developing this education campaign.

Please visit the APCA website for a consumer information brochure. 
 

Are all ATMs owned by banks?

No. There are around 26 000 ATMs in Australia and banks own around half of those – (11, 200 –  43%). Other providers own the rest which include credit unions, building societies and  independent deployers who supply cash machines to service stations, pubs, clubs, casinos and  other locations.
 

How much will these fees be?

The fees charged by both the ATM owner and customer’s bank will be determined independently  by the institutions. There is no regulation of these fees.
 

What consumer protections will there be?

Under the new rules, the customer’s bank cannot limit what the ATM owner charges the ATM  user, so the fee may vary between ATMs.

However, under the rules, the ATM owner must disclose on the ATM screen the direct charge  amount. If the customer decides the fee is too high, the customer can cancel the transaction at  no cost.

Will these changes affect transactions I make at an ATM owned by my bank?

No. These changes do not apply when you use an ATM owned by your bank.
 
If your bank has arrangements to share other ATM networks, then it is likely that the changes will not apply at those ATMs either. Check with your bank.

What if I think the ATM owner fee is too high?

Foreign ATMs do provide convenience of access to cash where you are, when you need it, seven days a week, 24/7.
 
Under the new rules, the customer’s bank cannot control what the ATM owner charges the customer, so the fee may vary between ATMs.
 
However, the ATM owner is required to disclose on the ATM screen the direct charge amount. If you decide the fee is too high, the transaction can be cancelled at no cost.

Which ATMs are affected?

All ATMs are affected and Australia has around 26 500 ATMs. From 3 March 2009, most of these ATMs will show the ATM owner’s fee on the screen.
 
Others - some 2500 independently-owned ATMs - will need to be re-programmed in the coming months. These machines will use stickers to display the ATM owner fee.

What will happen when I use an ATM owned by my bank or a networked ATM?

The experience will, more than likely, be the same as before. It is the responsibility of individual banks to provide ATM services, not the Australian Bankers’ Association (ABA).

Will it take longer to use a foreign ATM?

Deciding on whether to proceed or cancel the transaction should only take a few seconds.

Will my bank tell me about the changes?

Each institution (banks, building societies, credit unions, other card issuers and independent deployers of ATMs) will be reviewing ATM fees.
 
Each bank will make its own decision about the fees it charges and bear in mind if an ATM owner fee applies, it will be disclosed on the ATM screen at the time of the transaction.

Who can I contact if something goes wrong at a foreign ATM?

The existing dispute resolution processes apply, that is, generally cardholders should contact their bank or the company which issued the card (for example, a credit union or American Express) who will then initiate a process with the bank or financial institution which processes the transactions from that ATM.
  
Cardholders can also contact the ATM owner directly if they wish as all ATMs should have a contact phone number or URL (the address to locate a specific site on the Internet).
 

[1]  There is no neat way to describe all participants in the ATM market. Those companies which own ATMs include banks, building societies, credit unions and others. The others are independent companies sometimes described an independent deployers of ATMs or third party ATM deployers. These machines are often found in service stations, pubs and clubs, are not owned by financial institutions and so do not carry a financial institution’s branding.