Mentis Corporation press release,
Mentis Corporation Research Documents Consumer Acceptance
of ATM Surcharging
DURHAM, N.C., Dec. 12 -- According to Mentis Corporation's recently released research program, "Consumer Attitudes and Preferences," more than one-half (52%) of adult ATM users have paid a surcharge to withdraw cash from ATMs not owned by card-issuing institutions. Surcharge-paying consumers are typically young to middle aged (between 18 and 54 years of age), coming from middle-income households.
Beth Phillips, Senior Project Manager of the research program, observes, "The average surcharge paid by consumers is about $1.50. However, more than one-quarter of both Generation X and Baby Boomer ATM users have paid more than $1.50 to use ATMs not owned by card-issuing institutions."
Mentis research shows that ATM users who have paid a surcharge to access foreign ATMs appear very tolerant of incremental increases in average surcharge amounts. Well over 50% of consumers who have used surcharging ATMs would continue to use the machines, even if the amount of the surcharge increased by 50 cents. While most consumers electing to continue using surcharging machines would do so more selectively, this behavior seems to indicate a very strong acceptance of surcharging. However, if average surcharges were to be doubled, more than three-quarters of all current surcharge-paying consumers would discontinue their use of other banks' ATMs altogether.
"Consumers are sending an important message to banks," continues Phillips. "While many consumers apparently will pay something, albeit less than $2.50, for access to ATMs not owned by their banks, a large majority will not accept rising fees. Banks need to be cognizant of consumers' surcharge thresholds -- exceeding tolerable limits may result in declining transaction volumes and less profitable machines. In addition, banks must be critically aware that while the use of foreign ATMs is prevalent, consumers continue to vehemently oppose surcharging."
Not surprisingly, Mentis research shows that over one-half of all consumers say they are unwilling to pay a surcharge for convenient access to ATMs. Moreover, when given the choice between free ATM transactions and convenient ATM access (an ATM located near home or work), most consumers (66%) elected to choose free transactions.
Phillips concludes, "This indicates that the value proposition of convenient access to bank services through ATMs is not strong enough for consumers to attach a monetary value to ATM use. The data clearly shows that continued growth in ATM use is sustainable only through offering consumers incentives that reinforce and encourage self-service use. Surcharging, while creating significant revenue opportunities for banks, will negatively impact ATM transaction volumes and may drive consumers to use the ATMs owned by their own card-issuing banks. Surcharging may also impact attrition rates as consumers move their accounts to banks with more accessible ATM networks. If banks are to succeed in migrating routine transactions out of branches, they must properly incent the behaviors they wish to produce."
Mentis Corporation is an international research firm specializing in the evaluation of information and communications technology (ICT) within the financial services industry. For over a decade, Mentis Corporation has been evaluating industry conditions, profiling technology practices, tracking trends and assessing technology dependent strategies and initiatives. By focusing on specific IT disciplines within the financial services industry, Mentis Corporation is uniquely qualified to provide a comprehensive source of expert, unbiased and timely information to assist financial institutions in making the best use of technology to achieve their strategic objectives. For additional information, please call Michael Keegan, Marketing Manager, (919) 403-5000 x212.