New Study Shows ATM Users Are Aware of Fees They Payfor Convenience; Dove Reports Consumers...

Business Editors

HOUSTON--(BUSINESS WIRE)--May 23, 2000

The overwhelming majority of consumers in areas that have experienced ATM surcharges -- or convenience fees -- over an extended period of time are fully aware of the charges they pay for the convenience of withdrawing cash

Based on this understanding, consumers have changed their behavior and are making informed choices to obtain cash.

These are among key findings of a new research project by Dove Consulting Inc. and Analytica Inc. that probed consumer behavior and attitudes regarding fees associated with ATM card usage.

The Dove study, commissioned by PULSE(R) EFT Association, one of the nation's leading electronic funds transfer networks, reports that 86 percent of all consumers surveyed say they are adequately informed of charges they sometimes pay for the service.

Equally decisive, 82 percent of consumers surveyed feel they have adequate access to cash without having to pay a surcharge.

The study was conducted among 700 ATM card users across seven states in PULSE's primary service area to assess consumer behavior in areas where such fees have been in existence for nearly a decade. The PULSE program was the first in the nation to allow the fees as a result of a court-ordered arbitration hearing that forced PULSE to accommodate these fees.

"The findings are very significant because this is the first study of its kind ever conducted in a mature surcharging environment," said Tony Hayes, Director of Dove Consulting. "The study provides empirical evidence that the overwhelming majority of consumers are adequately informed regarding fees they occasionally pay related to this convenience. It is equally evident that consumers understand their widely available options to avoid payment of such fees, if they so desire.

"The study conclusions make it very clear that the marketplace is functioning well regarding ATM use," Hayes said. "ATM users who wish to pay a fee for the convenience of obtaining cash anytime, anywhere are consciously paying to do so. At the same time, cardholders who wish to avoid such fees understand the many options available to them, and have modified their behavior accordingly."

It is required that ATM installations display information on or at the ATM about any surcharges or convenience fees required for a transaction. In addition, on-screen notices of such fees, including the amount of the fee, must be provided, allowing customers the option to cancel the transaction, if desired. When ATM cards are issued, cardholders are informed that a fee may be imposed either by the machine operator for transactions involving ATMs not owned by the customer's financial institution, or by any network utilized to effect a transaction. Typically, cardholders pay no fee for use of a card issuer's own ATM.

Other findings of the Dove study:

-- ATMs remain consumers' preferred method of obtaining cash by a

margin of eight-to-one over any other method.

-- Even though 75 percent of consumers report using an ATM as

their preferred method for getting cash, only 58 percent

report that they ever have paid a surcharge.

-- Of consumers who have paid a surcharge within the last 14

days, 96 percent reported that ATM fee disclosures are

sufficient.

-- Nearly 80 percent of surveyed respondents had not paid a

surcharge in the previous 14 days.

-- Consumers have responded to ATM surcharging by increasing

debit and credit card usage and by getting cash from other

sources more frequently.

-- Nearly 59 percent of respondents knew that they could get cash

back without a surcharge at point-of-sale terminals, and more

than one-third had availed themselves of that option.

PULSE CEO Stan Paur noted that the findings have major relevance to any public policy discussions regarding convenience fees or their disclosure because he believes they represent a precursor of universal consumer response once surcharges have been experienced for a period of time.

"Since PULSE's environment is not unique, we can expect the same behavioral patterns from consumers nationwide as they adapt to convenience fees," he said.

Paur said that the latest study findings support arguments that additional legislative or regulatory action at either the state or federal levels to require further disclosure procedures or to ban or limit fees is unwarranted and unnecessary. PULSE is a shared EFT network serving more than 2,100 banks, credit unions and savings and loans in a nine-state primary service area including Alabama, Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee and Texas. The network processes in excess of 45 million transactions monthly and features more than 46,000 ATMs and 236,000 PULSE(R)PAY point-of-sale terminals in all 50 states. For more information, visit the PULSE Web site at www.pulse-eft.com.

PULSE(R)EFT Association commissioned Analytica Inc. and Dove Consulting Inc. to jointly conduct the study of consumers' reaction to ATM surcharging.

Phone interviews were conducted with 700 consumers in seven states that are considered "mature" surcharging environments. (Texas, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi and Tennessee.) A "mature" surcharging environment refers to a state where surcharging has been permitted since before April 1996, when it began to spread nationwide.

These states were selected because they are the ones where consumers have had the most time to react to these fees, and are therefore likely to be indicative of the overall U.S. population once surcharging in other states becomes more established.