Paying for ATM usage: good for consumers, bad for banks ?

Jocelyn Donze () and Isabelle Dubec

MPRA Paper from University Library of Munich, Germany

Abstract: We compare the effects of the three most common ATM pricing regimes on consumers’ welfare and banks’ profits. We consider cases where the ATM usage is free, where customers pay a foreign fee to their bank and where they pay a foreign fee and a surcharge. Paradoxically, when banks set an additional fee profits are decreased. Besides, consumers’ welfare is higher when ATM usage is not free. Surcharges enhance ATM deployment so that consumers prefer paying surcharges when reaching cash is costly. Our results also shed light on the Australian reform that consists in removing the interchange fee.

Keywords: Banks; ATMs; Interchange Fees; Welfare (search for similar items in EconPapers)
JEL-codes: G2 L1 (search for similar items in EconPapers)
Date: 2008-09-16
New Economics Papers: this item is included in nep-ban and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: PAYING FOR ATM USAGE: GOOD FOR CONSUMERS, BAD FOR BANKS?* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10892

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