Surcharges at automatic teller machines are rising across the state, even as merging banks post record profits, and students are among consumers hit the hardest.
That was the conclusion of a study released Thursday by Rep. Matt Entenza, DFL-St. Paul, and the Minnesota Public Interest Research Group. The study, which surveyed surcharges at 225 ATMs and 74 banks across the state, found steadily rising costs to banking consumers and record-breaking profits for many banks.
Last year in Minnesota, the average ATM surcharge fee rose from $1.05 to $1.21, said MPIRG consumer advocate Anita Seeling. During that time, the number of ATMs that assessed surcharges rose from 83 percent to 95 percent, she said.
In part, the rising fees can be attributed to ATM owners lifting surcharge bans three years ago, Entenza said. Nationwide, revenues from surcharges rose from $292 million in 1996 to $655 million in 1997, Entenza said.
He and Sen. John Hottinger, DFL-Mankato, authored bills in the state Legislature to prohibit the surcharges. Both bills died in their respective commerce committees.
A movement to ban the surcharges last year, led by former Attorney General Hubert H. “Skip” Humphrey III, also died in legislative committees before either chamber could vote on it.
College students are among the consumers who use ATMs frequently, and thus pay the fees.
MPIRG campus organizer Jeff Bartleson said students tend to use the machines because they cannot get to banks during business hours between classes and work.
Surcharge critics say ATM fees discriminate against people with lower incomes. Seeling said banks often waive the fees if customers have a sizable balance in their checking accounts. But people with low incomes can’t meet the minimum requirements to earn that type of waiver, meaning they pay higher fees to access their own money, she said.
On top of that, banks often charge fees to their customers to cover their costs.
Two major companies — Visa and Master Card, which own Plus and Cirrus machines, respectively — own a large percentage of the nation’s ATMs.
These companies charge both consumers and banks to use their machines. Banks then pass the costs on to consumers. In Minnesota, the average cost charged to banks is 25 cents per transaction.
“This is moving into the area of gouging customers to get their own money,” Entenza said.
Entenza said large banks like Wells Fargo that use ATMs are starting to assess surcharges of $2 to $2.50. In California, the only Wells Fargo-owned ATM that does not assess the fee is located at the state Capitol building in Sacramento.
Seeling suggested ATM owners be compensated by customers’ banks, which in turn pass the cost off to users. But she contended that allowing ATM owners to assess surcharge fees unfairly hurts machine users and compensates the ATM owners twice.
Although two bills to prohibit the fees failed to make it past the commerce committees last month, Entenza said he intends to author the bill again during the next session.