ATM industry braces for a continued fight against the Harkin amendment

The ATM industry may have won a battle with the blockage of the Harkin amendment, but the war is far from over.

The amendment (SA-3712) proposed by Senator Tom Harkin (D - Iowa), which would have capped ATM fees at 50 cents, was blocked from reaching the Senate floor. The mood of the ATM industry is one of relief mixed with wary caution as to what the future could hold, as a modified version of Harkin's amendment and the Durbin amendment both pose questions and challenges for the future.

"The failure of the Harkin amendment is a bold step forward for the ATM industry in the US showing how collective action can get our message across that we are a well-run, well-established industry that has operated successfully for over forty years and does not need governmental price control," said Michael Lee, chief executive officer of the ATM Industry Association.

While the ATM industry is happy with the defeat of the initial Harkin amendment (SA-3712), industry professionals feel it is not a time for complacency. They view Senator Harkin's efforts as a reason to become more pro-active in getting the industry's message out.

"This was a big wake-up call to the industry," said Haze Lancaster, founding partner of ATM USA. "We need to do a better job of educating our legislators as to the true makeup of the ATM industry."

Lancaster says more than 50% of ATMs are owned by independent operators, not banks and that these independent operators have real costs associated with owning and operating an ATM that go beyond the 50 cent cap Harkin proposed.

"Legislation like this would hurt a lot of small businesses, not the banks," Lancaster said.

And they have reason to be wary. While the first amendment failed, Harkin has since modified it and is presenting a new amendment (SA-4085) for debate. The new amendment removes the hard $0.50 cap on ATM fees and instead calls on fees to "bear a reasonable relation to the cost of processing the transaction." Harkin's amendment would also allow the newly formed Consumer Protection Bureau to set rules governing such fees.

"While the $0.50 surcharge cap is now off the table, the bill still contains an amendment that would allow surcharge to be limited by another controlling body," said Pat Detlefsen, senior client relations manager of Meta Payment Systems, in an email.

Calls made to Senator Harkin's office were not returned by press time.

Another piece of legislation the industry has its eye on is the Durbin amendment, which would direct the Federal Reserve to create rules ensuring that debit card interchange fees are reasonable and proportional to processing costs. Typical interchange fees can run between 1-2% of the transaction amount. As a result, some merchants may be less inclined to accept debit cards because of the fees. Lancaster says the industry is watching this amendment closely, but is unsure of whether or not it will be helpful or harmful to the ATM industry.

Regardless of whether its the modified Harkin amendment or the Durbin amendment, the ATM industry will remain active in defending their interests and will closely monitor further developments.

"We will remain vigilant over the coming weeks and months," Lee said.