LONDON -- Barclays has decided to drop all ATM charges, a reversal of its proposal 10 months ago to levy a £1 surcharge on withdrawals from its machines by non-customers.
HSBC, Lloyds TSB, National Westminster and Abbey National also recently dropped plans to surcharge, according to the Financial Times.
The reversal is considered particularly embarrassing for Barclays because Matt Barrett, its CEO, had defended the bank's decision to surcharge before a Commons select committee in April.
Barclays was the first British bank to propose charging non-customers a convenience fee for withdrawals from its machines, replacing the "disloyalty" fee of £1 it used to charge its own customers for using other banks' ATMs. All of the UK's big banks followed suit, deciding to impose surcharges and scrap their disloyalty fees of £1 to £1.50.
Their decision to abandon all charges will cut more than £100 million from the industry's income. The new charges were to take effect in January 2001.
According to Barclays, its reversal was a response to customer demands for simplicity, and the move will cost the bank around £2 million a month in income.
Some competitors were pleased at what Brian Davis, chief executive of Nationwide, called a "big U-turn." Davis, who had earlier threatened Barclays with legal action in an unsuccessful attempt to stop the charges, said consumers were the winners.
Lloyds TSB on July 3 defended ATM charges as "logical" and said it still supported them in principle. But it said it is dropping its plans for a 50-pence charge because of customer confusion over the issue.
ATMs owned by the five new non-bank members of Link, the UK's national ATM network, will still impose £1 fees for withdrawals. A board member of a major bank told the Financial Times that banks may begin charging the fees in a few years if consumers prove willing to pay them.
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