Heterogeneity in Service Fee Sensitivity: Evidence from ATM Surcharges

Krzysztof Wozniak
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Krzysztof Wozniak: https://www.federalreserve.gov/econres/krzysztof-p-wozniak.htm

No 2026-072, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Service fees continue to proliferate in a wide range of markets, from retail to payments, generating questions about their impact on consumer choice, competition, and fairness. This paper explores how sensitivity to such fees varies across consumers, use cases, and competitive settings, and whether it is affected by consumer learning. I am able to conduct this in-depth empirical analysis thanks to a uniquely detailed, high-frequency panel data set on surcharged ATM cash withdrawals. Results show that average elasticity estimates mask substantial heterogeneity in consumer sensitivity to service fees. I explore ways in which market and behavioral mechanisms can help explain this heterogeneity. Finally, I investigate whether consumers strategically adjust their behavior in response to service fees.

Pages: 33 p.
Date: 2026-11-02
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:104001

DOI: 10.17016/FEDS.2026.072

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