Banks back ATM fee policy

Meeting with Flaherty: Retail outlets could suffer, says private operator

Duncan Mavin, Financial Post, with a file from Jonathan Harding in Calgary Published: Friday, March 02, 2007

The possibility that a meeting between Canada's banks and Finance Minister Jim Flaherty next week that could see a prohibition on the banks' right to charge fees to users of automated banking machines has some on Bay Street scrambling.

But moves to stop the banks charging the fees would be even more damaging for owners of so-called white-label machines, says the head of a company that operates 20% of Canada's independent ABMs.

White-label ATMs are the non-bank owned cash dispensers often found in convenience stores, bars and elsewhere.

They sprang up in the aftermath of a government tribunal in 1996 that ordered the opening up of the ATM market to companies other than banks, and permitted banks and their competitors to charge a fee to ATM users.

The white-label machines now outnumber the bank-owned machines by about two to one.

If the banks are now no longer allowed to charge fees, it could spell disaster for the industry and reduce choice for consumers, said Mischa Weisz, chief executive of TNS Smart Network Inc., in a letter submitted to the chair of the House of Commons standing committee on finance.

To compete with the banks, white-label providers would be forced to lower their fees, too, and could be forced out of business, Mr. Weisz said.

The overall number of ATMs available to Canadians would fall, and there would be a loss of income for small businesses that benefit from having the machines on their premises, Mr. Weisz said.

Meanwhile, two bank CEOs who were speaking at their annual meetings yesterday remained tight-lipped about the ATM fee showdown scheduled for Monday.

Canadian Imperial Bank of Commerce CEO Gerry McCaughey refused to give a direct answer to reporters who asked what outcome he expects from Monday's meeting, though he said CIBC has invested $125-million in the last year on improving its network of 3,800 machines to gain a competitive edge.

Bill Downe, the new CEO of Bank of Montreal, said he is "sympathetic to customer issues," but offered no specific details ahead of the meeting. "I'd hate to tell the [Finance] Minister what I'm going to tell him before I tell him [in person,]" said Mr. Downe.

dmavin@nationalpost.com

© National Post 2007


Banks back ATM fee policy Meeting with Flaherty: Retail outlets could suffer, says private operator Duncan Mavin, Financial Post, with a file from Jonathan Harding in Calgary Published: Friday, March 02, 2007 The possibility that a meeting between Canada's banks and Finance Minister Jim Flaherty next week that could see a prohibition on the banks' right to charge fees to users of automated banking machines has some on Bay Street scrambling. But moves to stop the banks charging the fees would be even more damaging for owners of so-called white-label machines, says the head of a company that operates 20% of Canada's independent ABMs. White-label ATMs are the non-bank owned cash dispensers often found in convenience stores, bars and elsewhere. They sprang up in the aftermath of a government tribunal in 1996 that ordered the opening up of the ATM market to companies other than banks, and permitted banks and their competitors to charge a fee to ATM users. The white-label machines now outnumber the bank-owned machines by about two to one. If the banks are now no longer allowed to charge fees, it could spell disaster for the industry and reduce choice for consumers, said Mischa Weisz, chief executive of TNS Smart Network Inc., in a letter submitted to the chair of the House of Commons standing committee on finance. To compete with the banks, white-label providers would be forced to lower their fees, too, and could be forced out of business, Mr. Weisz said. The overall number of ATMs available to Canadians would fall, and there would be a loss of income for small businesses that benefit from having the machines on their premises, Mr. Weisz said. Meanwhile, two bank CEOs who were speaking at their annual meetings yesterday remained tight-lipped about the ATM fee showdown scheduled for Monday. Canadian Imperial Bank of Commerce CEO Gerry McCaughey refused to give a direct answer to reporters who asked what outcome he expects from Monday's meeting, though he said CIBC has invested $125-million in the last year on improving its network of 3,800 machines to gain a competitive edge. Bill Downe, the new CEO of Bank of Montreal, said he is "sympathetic to customer issues," but offered no specific details ahead of the meeting. "I'd hate to tell the [Finance] Minister what I'm going to tell him before I tell him [in person,]" said Mr. Downe. dmavin@nationalpost.com © National Post 2007