Financial institutions should consider surcharge-free ATMs
ATMs have remained one of the strongest points of banking service. The convenience of withdrawing cash at any time is an enticing benefit for many consumers. However, it's also a strong source of potential revenue, at the risk of alienating the consumer. That's why it's often a big question of whether financial institutions should implement surcharge fees to use the machines that are outside the banking network. However, with ATMs being so prolific, a great way to stand out from competitors is to offer surcharge-free ATMs in different ways. By increasing convenience, customers will be more open to switching banks.
Surcharge-free use of ATMs a major consumer benefit
The major issue surrounding fees is their purpose to the FIs themselves. They present a small supplement to a bank's profit margin, knowing fully well that many customers won't have access to their local ATM networks at all times. There is also the fact that they can help pay for further expansion of the ATMs, which will benefit customers in the long term.
However, the problem with this thinking is that customers don't like paying a surcharge for using a non-bank ATM to withdraw cash. Already, they're likely paying the machine's operator an additional foreign fee for using the ATM. They see the subsequent surcharge as a form of punishment they didn't deserve. It's little wonder, then, that a Javelin study cited by ATM Marketplace found that the leading reason to switch to a different bank or credit union was because of these surcharge fees.
There have been some ways around this issue. For example, the removal of the foreign ATM fee was a start, followed by a limited number of free transactions per month for using out-of-network ATMs. But that isn't enough, especially given that the latter is considered a reimbursement that is paid eventually, not a lack of fees outright.
To address the issue of surcharges in such a way that doesn't alienate customers or shareholders, banks should consider a number of options. One is to join surcharge-free networks. That means becoming members with a national or international network that provides access to thousands of ATMs everywhere. By presenting that option, even small banks have a far greater reach than their business implies. Another option is to create branded ATMs to place in convenience stores, supermarkets and other retail outlets. By working with a business with a high traffic volume, financial institutions gain branding and publicity, while providing their customers some added convenience to how they function every day.
July 29, 2015