Over the past five years, several state and a few local governments have tried, largely unsuccessfully, to determine how much financial institutions and ISOs can charge consumers for using ATMs.

One state, Iowa, has an outright ban on surcharges. However, a September decision by a U.S. District Court judge to move forward in federal court with a lawsuit filed by five financial institutions is the latest move in a case that may clear the way for surcharging there. (See related story Early decision in Iowa surcharge suit goes banks' way)

While Iowa and several municipalities, including the California cities of Santa Monica and San Francisco, have been somewhat loudly wrangling with deployers over the right to surcharge, two states -- Arkansas and Wyoming -- quietly impose caps on the fees.

Officials with the Arkansas State Bank Department would refer only to its Banking Code of 1997, which states that "the usage fee shall not exceed two dollars or two percent of the gross amount of the transaction, whichever is less."

Wyoming's fee was set at $1 in 1995 and then raised to $1.50 in 1999. (See related stories All quiet on the Western front and Wyoming raises ATM surcharge cap)

"The way our statutes read is that the fee is set by rule of the (banking) commissioner, not to exceed $2," said Marlene Aitchison, the project coordinator for Wyoming's Division of Banking. "The legislature has set that ($2) maximum. Where we've established the $1 and then the $1.50 is within the rules and regulations."

Aitchison said the division increased the ATM user fee to $1.50 once they had determined that the cap would still be low enough for consumers, yet high enough to cover the costs of operating the machine.

Yet there are those who disagree.

Marty Ambuehl, president of ATM Express, said an ATM could cost his company anywhere from $3,500 to $17,000. Banks and other financial institutions typically spend more for their systems - up to $50,000 for a drive-up machine. And monthly operating expenses for an off-premises ATM average $1,016 a month, according to a recently released study by Dove Consulting.

Ambuehl and other ATM deployers say a $1.50 a transaction may not be enough to cover those costs.

"I think they have the right intentions generally," said Tom Busi, president and chief executive officer of California-based Firstcard ATM, which has about 50 machines deployed in Wyoming. "They want to protect the cardholders, the ATM users, in the state from being charged excessive fees. But when they set the surcharge limit too low then it just limits the cardholders in the state. It limits their accessibility to ATMs."

"I kind of purposefully stayed out of Wyoming," said Ambuehl, whose company is based in Montana, Wyoming's neighbor, yet doesn't deploy machines there. "Mainly there's some local bank sponsorships you've got to get there as well as the surcharge limitations. There just isn't much population in Wyoming."

Aitchison acknowledges that Wyoming's population pattern results in some sporadic transaction numbers.

"Just from the people I have visited with over the last several years, some of them have as few as 50 (transactions a month)," Aitchison said. "Some have 200, 300, 400 plus. But it depends on the location and the amount of traffic that does flow through that business."

Busi said the benefit of placing an ATM in a less-populated area has to outweigh the loss of surcharges.

"We have some in rural areas where the benefit of owning the machine is not strictly the transaction revenue," Busi said. "It may be the fact that there is no other ATM around for a long distance, or that there are other benefits like enchancing customer loyalty and having a competitive advantage over others in the industry."

Like Busi, Sam Jonas of Colorado-based Cash Resources accepts the caps but admits they can hinder business. Jonas has machines in many Western states, including Wyoming.

"Those are the prerogatives of the states," Jonas said. "We live with it and work with it."
 
Ambuehl said that both financial institutions and ISOs should use common sense in assessing user fees.

"When we start gouging the public out there, it puts a perception that maybe we need to be more regulated," he said. "So I try to be careful about that with our distributors as well, saying 'Let's take a little chunk. Let's make some money but not get greedy.' Because all we're going to do is invite somebody to come in and regulate us even heavier than we are."