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Federal Reserve reports growth in ATM withdrawals

The Federal Reserve reported an increase in "on-us" ATM withdrawals, but foreign withdrawals declined during the years covered by the study.

April 4, 2011

A Federal Reserve payments study released today reported that there were an estimated 6 billion cash withdrawals from ATMs in 2009 with a total value of $646.7 billion, compared with 5.8 billion cash withdrawals from ATMs in 2006 with a total value of $578.8 billion.
 
The number of ATM withdrawals represents a compounded annual growth rate of 0.9 percent between 2006 and 2009, the years covered by the study, "2010 Federal Reserve Payments." The value of the ATM withdrawals increased 3.8 percent annually.

According to the report, 4.2 billion ATM withdrawals occurred at commercial banks, 1.4 billion withdrawals took place at credit unions and another 300 million withdrawals occurred at savings banks.

The value of ATM withdrawals at commercial banks was $478.5 billion. Withdrawals from ATMs at credit unions represented $132.2 billion. Savings banks' ATM withdrawals were $35.9 billion, according to the study. The average dollar amount withdrawn from commercial bank ATMs was $113 billion. At credit unions, the average ATM cash withdrawal was $95 and it was $104 at savings institutions' ATMs.

The Federal Reserve reported an increase in "on-us" ATM withdrawals, but foreign withdrawals declined during the years covered by the study.

"The number of on-us ATM withdrawals improved at an annual rate of 1.8 percent from 2006 to 2009, from 3.6 billion to 3.8 billion transactions," the Federal Reserve reported. "The value associated with these withdrawals increased from $376.4 billion to $439.9 billion, a 5.3 percent annual increase based on the average withdrawal amount from $106 in 2006 to $115 in 2009." On-us are cardholder withdrawals made at a customer's bank's ATMs.

On the other hand, foreign ATM withdrawals, in which cardholders withdraw funds from an ATM that is not their bank's machine, decreased at an annual rate of 1.8 percent from 2006 to 2009. The associated value of the withdrawals, however, increased 0.7 percent per year. 
Most, but not all cardholders, have reduced their withdrawals from non-bank ATMs to avoid paying additional fees.

"Considering that foreign ATM fees commonly result in cardholder fees, one would expect rational account holders to try to minimize their cash access costs and withdraw higher amounts when charged fees than when they are not," the study reported. The value of foreign ATM withdrawal in 2009 was $206.7 billion compared with $202.4 billion in 2006.

As for on-us transactions, commercial banks captured the lion's share of on-us ATM withdrawals with $360.9 billion, representing 75 percent of commercial banks' total ATM withdrawals. Credit unions were second with $60.7 billion of on-us transactions or 46 percent of credit unions' total ATM withdrawals. Saving institutions' on-us withdrawals represented $18.2 billion or 51 percent of the institutions' ATM withdrawals.

The study found that credit union members were the least likely to use their depository institution's ATMs to make cash withdrawals. "Only 45 percent of ATM withdrawals made by credit union members were on-us," the report said. This compares with 72 percent of on-us withdrawals at commercial banks and 49 percent at savings institutions.

The study surmised that credit union members prefer instead to use their debit cards to get cash back at the point-of-sale or to withdraw funds from another financial institution's ATMs.

"Given that the vast majority of ATM withdrawals by credit union members are at foreign ATMs, and that fees by foreign ATM operators are common, it stands to reason that credit union members would feel greater incentives to seek out channel substitutes to access cash," the study found.