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BOSTON -- In testimony today on Beacon Hill, BankBoston reported that there has been little negative impact on consumers or competing financial institutions after several months of charging non-customer convenience fees at ATMs in Massachusetts.

Lindsey Lawrence, executive vice president and director of BankBoston's Electronic Banking Program, told the Massachusetts Legislature's Joint Committee on Banks and Banking that since the fees began last September, the free market has adequately provided customers with a range of choices and service. Moreover, she said, consumer behaviors have adjusted, indicating that non-customers and BankBoston customers alike are exercising their options.

Tracking usage patterns since last fall, BankBoston has recognized the following trends:

• Transactions by non-customers at BankBoston ATMs have decreased considerably since the implementation of convenience fees, declining by almost 20 percent.

• Immediately after BankBoston began assessing the fee, nearly 64,000 non-customers canceled their transactions after learning they would pay a $1 fee, choosing instead to exercise another option to access their funds.

• Transactions made by BankBoston's own customersat its ATMs have increased by nearly 10 percent, indicating that BankBoston's customers have changed their banking habits after being assessed a convenience fee when using other banks' ATMs.

• In the months since the fee was implemented, BankBoston has received very few comments from either customers or non-customers regarding the fee. Fewer than 20 comments were recorded by phone or in writing since September 1998.

"As a result of our ability to distribute costs more fairly, BankBoston has been able to provide additional benefits to our own customers," Lawrence said. "For example, we reduced substantially the foreign ATM transaction fees for our customers. We are also making a variety of improvements to both our ATM network and on-line banking capabilities, in order to better serve customers."

BankBoston's network of over 1,200 ATMs cost nearly $100 million to
develop, and the bank said it spends that much every year to maintain the network.

Lawrence said, "We have made a strategic investment in a broad ATM network because our customers have told us they greatly value convenience. Our customers pay for the cost of service through our existing deposit and fee structure. We have no such relationship with non-customers. As a result. . . we and banks in 47 states use convenience fees to cover these costs."

Prior to the time when BankBoston began charging non-customer convenience fees, it pledged that it would adhere to a set of guidelines. These included supporting on-screen and external ATM sign disclosure of fees to non-customers, enabling non-customers to cancel a transaction without being penalized, assessing a fee that was lower than or equal to the national average, and pledging to return the major portion of the net revenue associated with this fee to its own customers. BankBoston has fulfilled each of these commitments, said Lawrence.

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