ATM fees haven't been an issue for Kansas policy-makers. But one legislator is ready to bring the issue to the table.
Kansas so far has stayed out of the national fray between banks and consumer groups regarding automatic teller machine fees. But that could end in the coming legislative session.
The controversy elsewhere hasn't visited Kansas because consumers apparently haven't been complaining to anyone but one another. And most legislators, in a state that lacks a consumer lobby, have considered the fees a nonissue.
That surprises some, especially in Lawrence, where a large segment of the population is hit hard by the fees. Many Kansas University students rely on out-of-town banks and end up paying twice to gain access to their own money.
"I'm sure it's a bigger issue in Lawrence," said State Sen. Sandy Praeger, R-Lawrence, vice chair of the Senate Financial Institutions Committee. "It's more convenient for parents to deposit money into a home account, and then students have to pay a fee to access it. There's a price associated with convenience."
Most ATM customers who withdraw from machines at banks where they don't have accounts are charged twice for the transaction: Once by the bank that owns the ATM and again by their own bank for using another bank's machine.
National consumer groups refer to the ATM fees as "double dipping"; banks claim the fees are the cost of convenience.
No student discount
David Mitchell, a KU student from Hays, said he opened a second checking account with Commerce Bank when he moved to Lawrence simply to avoid the access fees.
But Mitchell said he occasionally uses his home account, paying $1 each time he uses an ATM in Lawrence to check the balance in his Hays account where his parents deposit money for him.
"The biggest problem is that if you bank ... where you're from, you have to pay a fee because Goldenbelt Bank from Podunk, Kansas, doesn't have an ATM in Lawrence," he said.
Price of convenience
Zack Baze, a regional marketing coordinator for Commerce Bank, which has four ATMs on the KU campus and six additional ATM locations throughout Lawrence, said he could not disclose the number of noncustomer transactions made at Lawrence ATMs because it was trade information.
Noncustomer ATM fees in Lawrence range from $1 to $1.50. For students and others who often make small withdrawals, the fees add up fast during the course of a year.
According to the U.S. Public Interest Research Group, 93 percent of ATMs apply a surcharge averaging $1.37, and with a home bank fee added, the national average for an ATM transaction increases to $2.57.
After a year, a student without a local account making one withdrawal a week at the national average pays about $135 a year in ATM fees -- a stiff price for not banking locally.
"I do see it as a necessary fee to conduct transactions through another bank," Mitchell said, "but I also believe the banks are gouging the consumer with their fees."
He said ATM surcharges should not be higher than the cost of processing the transaction and maintaining the machine.
According to the federal Office of Thrift Supervision, the average cost to the ATM owner of processing a transaction is 27 cents, compared with the $2.93 it would cost for a human teller to process the same transaction.
But Jim Maag, vice president of the Kansas Bankers Assn., said that reckoning doesn't include the cost to banks of paying for and maintaining an ATM.
Maag said bans on surcharges would lead to fewer ATMs. People have other alternatives, such as banking locally or withdrawing more cash at one time, to avoid the fees, he said.
"You and I use ATMs because it is convenient to do so," Maag said. "People are willing to pay all the time for convenience. Anytime a public entity tries to control the market, all you're doing is hampering convenience for other people."
Banning extra charges
Some cities and states have tried to ban ATM surcharges since the fees emerged in 1996. But Iowa is the only state successful in outlawing them.
In Connecticut, the state Supreme Court struck down the state's surcharge ban on Dec. 20. Surcharge bans imposed by city councils in San Francisco and Santa Monica, Calif., remain before the courts.
Minnesota legislators plan to vote on a bill in 2000 that would ban surcharges on banks owning more than four ATMs. The Madison, Wis., city council also has discussed banning the charges, while Cleveland's city council wants to set up no-fee ATMs in recreation centers, police stations and city hall.
Kansans not concerned
So far in Kansas, and in Lawrence, ATM fees have not been an issue. Gayle Martin, city communications coordinator, said the Lawrence City Commission had never discussed them. Mary Tritsch, director of communications for the Kansas attorney general, said the office had not received a complaint regarding ATM fees for more than a year.
Praeger said the issue had never come up in her committee. But State Sen. Paul Feleciano, D-Wichita, also a member of the Senate Financial Institutions Committee, said banking issues -- including ATM fees -- would not go untouched in the next session.
"It's an issue that needs to be looked at," Feleciano said. "We need to look at the entire structure of banking systems in the state in light of the national act that has been passed."
Feleciano said new congressional legislation, which will allow banks to sell insurance and investment products, has some worried that big banks may grow bigger. Because of the act, he said, it was the perfect time to look into banking issues at the state level.
According to the U.S. Public Interest Research Group, "ATM surcharging is part of the big banks' anti-competitive strategy to squeeze out smaller banks and credit unions by encouraging their customers to switch their accounts to banks with larger networks."
Praeger said that when it came to antitrust activities, the state should closely monitor the situation. But she said noncustomer ATM fees in Kansas were reasonable and that banks could decide to lower their fees to be more competitive.
"There needs to be a balance between meeting consumer choice and allowing the market to function," Praeger said.
-- Katrina Hull is a journalism student at Kansas University and on an internship at the Journal-World.