STRATEGIC PARTNERS
Concerned about the health of the surcharge, but don't have a lot of time to do something about it? D.C. lobbying experts offer quick and easy tips on how you can add your voice to the fight against the ban. by Tom Harper, publisher
March 7, 2002
The ATM industry and financial institutions everywhere need more than a few good men and women to fight for the surcharge.
If you've ever wondered what it's like to run alongside important politicians, give them gifts and bend their ears, the time has come for you to dabble in the world of lobbying for a pretty important cause: your livelihood.
First the good news: Industry experts haven't sounded too many alarm bells, saying that D'Amato's bid for reelection is the driving force behind his crusade and his chances of success don't appear realistic.
But they also warn the fiery Republican from New York may have other tricks in his bag.
The purpose of this article is to equip you with techniques for lobbying your own senator against the surcharge ban.
The argument for the surcharge
"At this point, there is no evidence that the market is not working," said Linda Echard, President and CEO of IBAA Bancard in her testimony to the Senate Banking Committee.
"We, therefore, do not believe that legislation directly affecting pricing of ATM services is necessary or desirable due to several factors: first, options exist for consumers, second, price fixing would lead to reduced convenience for consumers, and third, price fixing would reduce or eliminate innovation."
Blake Hanlon at the American Bankers Association (ABA) agrees. "Restrictions on ATM fees are price controls, plain and simple. Price controls haven't worked in the past and won't work today."
Hanlon said nonbank ATM owners, a significant and growing part of the market, would go out of business. "The government's role in a free-market economy should not be to set prices in a competitive market--and the market for ATM services is very competitive."
Further ABA documentation reveals the following:
• ATM fees have increased the number of ATMs and consumer convenience. Since 1995--the last year network rules prohibited access fees--the ATM deployment rate has increased drastically. 1995's growth rate of 9 percent compares to 44 percent in 1996 and 45 percent in 1997.
• The interchange itself does not cover ATM costs. Until network rules permitted access fees, the Federal Reserve Board reported that ATM expenses exceeded revenues by thousands of dollars per machine per year. Expenses include hardware cost, installation, enclosure, rent, signage, security, cash replenishment and phone service.
• Convenience fees are not new or unique to banking. Many consumers are willing to pay a small fee for 24-hour, multi-location access to their money. Other areas where people pay extra for convenience include: cellular calls, express mail and one-hour photo processing.
• Consumers know how to avoid surcharges. Eighty percent of consumers say they avoid ATMs that charge them. They use machines owned by their bank, get cash back at a point-of-sale terminal or use ATMs that don't impose a surcharge.
• Price fixing will reduce innovation. Machines with multiple convenience features like ticket or stamp dispensing are justified by the surcharge revenue they produce. If this revenue disappears, so will the machines. Will consumers then complain about the absence of the machines?
The senatorial mindset
"A lot of the senators think this is a bankers' issue, that it's big banks charging consumers an extra fee to access their own money," said Arleen Alexander, Director of Legislative Affairs for the National Association of Convenience Stores (NACS).
"They don't realize that it's a lot of retailers--non-financial individuals and companies--that are offering services to their customers, and that if the surcharge is taken away, the retailers will have to remove that service because they can no longer afford it."
NACS polled its retail members on the effect of the surcharge ban on their businesses. Alexander stressed that many retailers make up the constituency D'Amato is trying to "protect" from surcharging. The NACS survey drew strong comment:
"We charge no access fee, which gives us a nice advantage over many of our competitors. Senator D'Amato should stay out of the free market place!"
"We purchased ATMs two months ago at customers' requests. The payback analysis requires an ATM fee be collected."
"This has to be the stupidest, most socialistic legislation introduced in 1998."
"Regulation would have the effect of leaving only banks in the ATM business."
"The convenience fee is vital to our offering ATM access to our customers on a continuing basis."
"Ask Alfonse D'Amato to build in legislation to buy all the machines that close! Senator D'Amato does not seem to grasp that it costs to provide ATMs, and a reasonable profit should be expected."
"I need to know what I need to do to help fight this."
What you can do to fight the ban
"The best thing you can do is to use the online resources and then feel free to pick up the phone--that's so effective for the senator to get phone calls," said NACS's Alexander. "We've seen that with a lot of issues. Any communication that's personal in nature works well."
E-mailing your senator can also get results, said Alexander. The following links to the NACS will assist your lobbying efforts.
Identify your senator -- If you don't know who your senator is, just enter your zip code and find out who serves you in Congress. When you find your senator, the system gives you a bio, e mail address, Web page link and a photo.
The automatic e mail or letter generator -- This feature allows you to customize a form letter and either print it out on your letterhead or e-mail it directly to your senator.
Congressional directory -- A complete guide to the members of the 105th Congress, with biographies, photos, committee assignments and staff members.
The senators that need the most attention
The following senators have taken a public position on ATM access fee ban legislation (S. 885) by either co-sponsoring the bill or voting on it during the Senate Banking Committee's markup of S. 1405, a regulatory burden relief act, on July 30, 1998.
Co-sponsors of the surcharge ban legislation:
Sen. John Kerry (D-MA)
Sen. Barbara Boxer (D-CA)
Sen. Richard Bryan (D-NV)
Sen. Carol Moseley-Braun (D-IL)
Sen. Patty Murray (D-WA)
Sen. John Chafee (R-RI)
Sen. Dianne Feinstein (D-CA)
Sen. Jim Jeffords (R-VT)
Sen. Chris Dodd (D-CT)
Sen. Tom Harkin (D-IA)
Sen. Russell Feingold (D-WI)
Senators who voted in favor of the ban:
Sen. Alfonse D'Amato (R-NY)
Sen. Paul Sarbanes (D-MD)
Sen. Christopher Dodd (D-CT)
Sen. John Kerry (D-MA)
Sen. Richard Bryan (D-NV)
Sen. Barbara Boxer (D-CA)
Sen. Carol Moseley-Braun (D-IL)
Senators who voted against the ban:
Sen. Phil Gramm (R-TX)
Sen. Richard C. Shelby (R-AL)
Sen. Connie Mack (R-FL)
Sen. Lauch Faircloth (R-NC)
Sen. Robert Bennett (R-UT)
Sen. Rod Grams (R-MN)
Sen. Wayne Allard (R-CO)
Sen. Mike Enzi (R-WY)
Sen. Chuck Hagel (R-NE)
Sen. Tim Johnson (D-SD)
Sen. Jack Reed (D-RI)
What's happening at the state level
Twenty-one states already have laws specifically authorizing ATM access fees. Senators from these states need to be reminded if they vote for the ban, they would preempt their own state's laws specifically permitting such fees.
The states that permit surcharging include:
Alabama, Arkansas, California, Georgia, Idaho, Illinois, Louisiana, Maine, Maryland, Mississippi, Montana, Nevada, New Hampshire, New Mexico, North Dakota, Rhode Island, Tennessee, Texas, Utah, Vermont, and Wyoming.
Nineteen states considered and rejected bills that would have prohibited or limited ATM access fees during 1998.
While 23 states had ATM fee ban or limit bills introduced during the 1998 legislative year, 19 of them either rejected such legislation or adjourned without taking action on the bill(s). With only four of these legislatures still in session, not a single state has adopted an ATM fee-limiting measure.
The 19 states that considered, but rejected or took no action on, ATM legislation this year are:
Alabama, Alaska, Connecticut, Florida, Idaho, Illinois, Kentucky, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Washington, West Virginia, and Wisconsin.
The case is doubly persuasive for the states in both of the above lists. The following six states both have laws on the books that specifically authorize such fees and considered, but did not adopt, legislation to ban or limit fees during 1998:
Alabama, Illinois, Maryland, New Hampshire, Rhode Island, and Tennessee.
Related stories:
PART 1--The surcharge ban: Short-term defeat in the senate
PART 2--The surcharge ban: Short-term defeat in the senate
>Sources:
• Arleen Alexander, Director, Legislative Affairs, NACS. Phone (703) 684-3600, Web site http://www.cstorecentral.com.
• Blake Hanlon, American Bankers Association, phone (202) 663-5485, Web site http://www.aba.com.
• For full testimonies of Senate Banking Committee witnesses, go to http://www.senate.gov/~banking/98_07hrg/071598/witness/witness.htm.
