STRATEGIC PARTNERS
Even though Sen. Alfonse D'Amato's ATM access fee ban amendment was killed in last week's vote, some experts think it's not completely dead yet. by Tom Harper, publisher
March 21, 2002
The financial industry wasn't too surprised last week when Sen. Alfonse D'Amato's ATM access fee ban amendment died in a decisive vote of 72 to 26.
But how decisive was it?
"Based on Sen. D'Amato's public comments, I don't think you can anticipate that this issue is just going to go away," said Stan Paur, president and CEO of PULSE EFT Association in Houston. "It will likely remain an issue for debate for some time to come."
"If the legislation had passed,"he said, "it would've had a chilling effect on deployment and on the outlook for the ATM industry."
Once an opponent to surcharging, Mr. Paur is now one the most outspoken proponents of the "convenience fee." Originally his network thought the fee would cause PULSE to lose revenue from lower transaction volume, but the market ultimately proved PULSE could actually profit from it.
The future volatility of the surcharge issue, said Mr. Paur, seems a nuisance at best.
"Based on the vote in the Senate, it's unlikely the issue will resurface unless it's attached to some bill down the road, but I don't think that's going to preclude ongoing debate, both among consumer groups, some politicians and perhaps the media."
Kurt Helwig, executive director of the Electronic Funds Transfer Association (EFTA), warns against overreacting to the vote.
"A lot of people are getting into the [ATM] business right now. It's certainly helpful [to the industry] that there's no ban at this time, but if I were an independent deployer I wouldn't rush in and deploy more machines without conducting a business case and then analyzing the politics in that particular state."
Mr. Helwig's assessment of state interpretation and regulation leaves the door open for uncertainty. "I'm much more concerned about that kind of [surcharge ban] legislation cropping up on a state level."
The issue is not going away, according to Mr. Helwig, not on the federal level and certainly not on the state level. In the last two years there have been over a hundred bills that were introduced in state legislatures that would in some way regulate the fee.
"Some of the state houses get off the wall in what their legislation calls for," he said. "Some will say, 'If you're the dominant financial institution in the area, or if you have over a billion dollars in assets, you cannot issue a surcharge.'"
Currently only regulators in Connecticut and Iowa prohibit surcharging in their states. These regulations are being challenged in court.
Other potential restrictions include surcharging customers and noncustomers equally, or having to disclose on the screen all fees associated with the transaction, including the switch and interchange fees, not just the surcharge itself.
"I don't want to be paranoid," said Mr. Helwig, " but I think should D'Amato get reelected, he will bring this up again in the next Congress--he's vowed it. If he wanted to, he could just make this an amendment to something else. My guess is that because of the vote count, he doesn't do that this year. My guess is that he'll reintroduce it next year."
Fritz Elmendorf, vice president of communications for the Community Bankers Association commented on the likelihood of the ban's resurrection. "There's still a possibility that Sen. D'Amato will try again, but we think the odds of that are highly diminished now. He's said he's keeping open the possibility, but we think that's unlikely given the size of the vote and frankly the political considerations associated with his reelection effort. It's not likely to be a big factor in the remaining days of Congress."
According to Mr. Elmendorf, Sen. D'Amato can legitimately claim he fought the good fight and made a name on the issue. But it's not likely that another vote would help him politically or that the outcome would change.
"We may hear some more about it," said Mr. Elmendorf, "but unless there's some kind of unforeseeable change, I don't think he'll make much of an issue about it."
There was sympathy for the view that these fees are unpopular, said Mr. Elmendorf, but it is basically a price control issue. "I think we hammered home the notion that it's a price control question, and certainly the Republicans didn't want to associate themselves with that on a philosophical level, and neither did many Democrats, it turns out."
EFTA's Mr. Helwig believes this is a populist issue that plays well back home for D'Amato. "If you were to go up and ask people, 'Do you like paying a buck and a half to take your money out of an ATM?' nine times out of ten they're going to say no. But if you phrase the question differently, like 'Do you appreciate the fact that you can get cash anywhere, anytime?' your results are going to be different."
To the extent Democrats or other legislators can translate this issue into votes, they'll do that, said Mr. Helwig. Sen. D'Amato can now go back to the people of New York--where he's up for reelection in November--and boldly tell them he fulfilled his promise to get a vote on ATM surcharging. Even though he wasn't successful, the long-term prospects of defeating the surcharge are still there.
Why the vote was so unbalanced
The American Bankers Association (ABA) and the Consumer Bankers Association coordinated a massive, cross-industry lobbying effort. A coalition of 37 corporations and associations focused on grass roots-targeted letters and phone calls.
Some of the coalition members include the following:
Diebold
EDS
MasterCard International
NCR
VISA USA
Bank One
Wells Fargo Bank
United States Chamber of Commerce
National Retail Federation
National Grocers Association
National Association of Convenience Stores
ATM Owners Association
"The educational efforts that have been underway for the last several months have paid off," said Mr. Helwig. "The coalition showed that this is not simply a banking issue."
He said the issue generated play on capitol hill behind the rallying call of big banks ripping off the consumer.
"But that becomes a much harder argument to make when you say the Truckstop Owners Association, the U.S. Chamber, the convenience store and chain drug store associations signed the letter addressed to senators," he said. "The senators understand revenue, taxes and jobs."
The ripple effect from an industry killer like the surcharge ban would have adversely affected many of the same consumers D'Amato was trying to protect, said Mr. Helwig.
>Sources:
• Stan Paur, president and CEO of PULSE EFT Association, can be reached via Read Poland Public Relations at (512) 472-4122.
• Kurt Helwig, executive director of the Electronic Funds Transfer Association, can be reached by phone at (703) 435-9800, fax (703) 435-7157, and e-mail kurthelwig@aol.com.
• Fritz Elmendorf, vice president of communications for the Community Bankers Association, is reachable by phone at (703) 276-3879 and via e-mail at felmendorf@cbanet.org.
