Chicago Tribune
Friday, January 23, 1998


Surcharge epidemic

      CHICAGO -- Cash Station Inc. President Stephen Cole calls state laws prohibiting ATM surcharges "anachronistic and monopolistic" (Business, Jan. 18). Nothing could be further from the truth.

      Surcharges are added fees tacked on to ATM withdrawals, beyond the built-in fee designed to cover the costs of processing the transaction. Surcharges typically are imposed only on non-accountholders, though a few banks have begun surcharging even their own customers.

      It is no coincidence that large banks are more likely to impose surcharges than smaller banks and credit unions. ATMs make it possible to choose a bank based on services and fees, not just location, so ATM surcharges make it more expensive to shop around for reasonable fees. Since large banks tend to charge the highest fees, they benefit the most from ATM surcharges.

      While the removal of surcharge restrictions has led to an increase in the rate of new ATM installations, the most dramatic effect has been the conversion of existing surcharge-free ATMs into surcharging ATMs. Surcharges are spreading in existing ATMs more quickly than new ATMs are being installed.

      It is ATM surcharges, not laws that would ban them, that are anachronistic and monopolistic. The consumer banking industry is already highly concentrated, and the situation will only get worse unless more states act to stop the surcharging epidemic.

  David E. Sorkin
Assistant professor of Law
The John Marshall Law School