NDP vs. ATM

The NDP has taken aim at ATM fees charged by Canadian banks. At issue is whether or not it is fair for Canadians to have to pay additional fees for accessing an ATM. In the case of using an ATM associated with their home bank there is no question that consumers should be exempt. The problem of whether banks should charge non-clients is more contentious, however a blanket no-charge policy would create a level playing field because all bank card users would benefit equally.

A majority of Canadians pay some form of service fees for the privilege of doing business with their bank, those service fees should include unlimited ATM access for all. Wealthier Canadians already enjoy immunity to many of the charges associated with ATM and debit card use by virtue of minimum balance accounts and other strategies that allow them to avoid user fees. It is only fair that banks extend some of these same privileges to all of their customers, regardless of income.

The banks contend that it costs money to maintain the machinery and network used to provide the instant teller system. Interestingly though, private ATM providers—which now control over 70% of the instant cash machine market in Canada—often charge the same $1.50 “convenience fee” as the banks and yet manage to make a handsome profit in the process.

The banks continue to cling to this justification however, insisting that the charges protect the interests of their own clients who would otherwise bare the costs for outsiders to use their bank’s machines. This argument is clever but misleading; if there were no charges then the customer of one particular bank would be free to use any other bank’s machine at will and therefore the costs and benefits would more-or-less offset.

The banks have also cited the unprecedented growth of the private ATM industry to demonstrate that Canadians are willing to pay additional fees to access cash. This may be so, but it is also possible that the explosion of private ATMs is a response the shutting down of so many local bank branches across Canada. Just as instant loan shops have flourished in places where traditional banking is no longer available, so too do private ATMs fill a service gap for people who’s communities are effected by closures.

It is no longer possible to exist in this country without somewhere to at least deposit and access money. Employers don’t often pay in cash, and the coffee can is just not a safe enough place to store one’s life-blood. However, as we are all aware, banks are businesses first, and their primary directive is to improve the bottom line.

The affordability and fairness of service fees is not a consideration for most banks, other than with respect to how these features translate into their ability to compete with other institutions. This open-market struggle can be a good thing for the ordinary consumer, but if all the banks agree that a fee should be imposed universally there is no evading it.

The NDP’s proposed policies on service fees may well smack of populist political posturing, but at the same time they do address the frustration and entrapment many Canadians feel toward banking fees in general, and ATM “convenience fees” in particular. These small measures will have no effect on the systematic complexities imposed by the public necessity for banking vs. the banks’ desire to remain preposterously profitable in perpetuity, but they do at least tackle a noteworthy consumer issue that can be amended through legislation.