Article

ATM industry insider sends an open letter to Senator Harkin

The CMO of Morphis gives a plain-language explanation of why the Harkin Amendment is bad for consumers.

May 16, 2010

Gary Faulkner is a 20-year veteran of the ATM industry, having served as VP of sales with Cardtronics, account executive with Diebold and co-owner of the ISO North American Cash Systems. He currently is the CMO of Morphis, supplier of currency supply chain and payment management software.

He recently sent an open letter to Senator Harkin regarding the proposed ATM fee cap. It tackles the issue with a necessary amount of humor, but also lays out the facts with precision and logic. With his permission, we're happy to reproduce it here in its entirety.

Re: SA 3812

Dear Senator Harkin,

Clearly your heart is in the right place. No one would disagree that the proposed legislation - to prevent big banks from taking advantage of their bigness - is well intentioned. However on the matter of ATM surcharging your efforts are sadly misguided.

First and foremost let me dispel the notion that the cash in an ATM is the same as your money in a bank. I can say this unequivocally because the ATM is not a repository for anyone's cash except the owner of the ATM. That ATM owner may be a bank or an ATM company or maybe even a merchant that owns the ATM (Imagine owning your very own ATM... what a great country America.)

The ATM performs the most unbelievable of magic tricks: It retrieves your money, from anywhere in the world where it's safely tucked away, exchanges it for the money in the ATM and then delivers to you. Let me explain what I mean.

Lets say that I live in Timbuktu (that's a real place over in Mali, Africa) but I happen to be standing in Carl's Place (that's a real beer joint in Des Moines, IA.) Now Carl's is a very friendly place, but they have this policy: They only accept US dollars. Sen. Harkin, can you see the dilemma here? Carl's beer joint is in Des Moines. My money is in Timbuktu. Carl's wants US dollars. My money is in Central African Francs. I'm thirsty and out of money. What is the solution? That thoughtful guy Carl has an ATM in his beer joint.

Like ATMs everywhere Carl's ATM works its magic. I swipe my ATM card, enter my PIN number and Carl's ATM almost instantly goes all the way to Timbuktu, gets 500 or so CFA Francs out of my bank account and delivers $100 US dollars right to my hand! Amazing, right?

Now there is this small rub. Any time someone takes money out of his ATM Carl expects to get more money back than he handed out. Hey, nobody ever accused Carl of being an altruist. In fact Carl is a practitioner of the oldest of the mercantile arts: Buy low, sell high.

Carl put his money in beer with the expectation of making a handsome profit just for chilling it and serving it. (Truth be known Carl is really not selling beer he's just renting it out for hour or so.) Of course its not just the beer Carl had to put his money into… Carl had to buy coolers to keep the beer cold and rent a building to put the coolers in. He pays the refrigeration man to keep the coolers running, and then pays a college kid to open the beer and clean the restrooms. By putting his money into beer Carl created an entire economy. Go Carl! It's not unreasonable to think that if Carl puts his money into an ATM he expects to get back more than he put in. Right?

But what if the Congress passed a law forcing Carl to sell his beer for just 50 cents more than he paid for it? Carl, along with many others, would get out of the beer joint business. Soon there wouldn't be any beer joints. The beer cooler industry would evaporate. The refrigeration man would sign up for food stamps. The college kid would have to dropout of school. That result would be an economic disaster. Nobody wants that - certainly not you and the citizens of Iowa. Senator, you might even like going to Carl's' from time to time.

In the same way that people choose to pay Carl for the convenience of drinking his beer, people choose to pay ATM fees to have their money delivered from wherever it is to wherever they are. It's the American way.

Sen. Harkin, like you I'm in favor of protecting our citizens from the ruthless deceit of a cadre of bad actors that would squander the collective wealth of America for their personal gain. I just don't believe that eliminating the livelihoods of thousands of guileless individuals working in the ATM industry is a path to that result. I respectfully ask you to please withdraw SA 3812. Who knows, someday I might run into you down at Carl's Place. If I do, I'll buy you a beer.

Warmest regards,

Gary D. Faulkner

Morphis, Inc.