Banks suggest NDP wrong -most ATM transactions are free

Paul Vieira, CanWest News Service; Financial Post Published: Friday, March 23, 2007

OTTAWA - Canadians have a bevy of choices in terms of withdrawing cash from an ATM - from paying nothing at a bank-owned machine to agreeing to a "much higher fee" for an automated teller at a strip club, the head of the Canadian Bankers Association told MPs on Thursday.

Raymond Protti, speaking on behalf of the country's big chartered banks, disputed claims of how much money banks earn from ATM fees, and cited statistics suggesting most Canadians don't pay fees on their ATM transactions.

Thursday's appearance before the House of Commons finance committee was the kickoff of hearings the MPs plan to hold regarding bank fees related to using automated teller machines, or ATMs. The issue has gained prominence since late mid-February when Finance Minister Jim Flaherty demanded answers from banks.

The minister, who said he was acting at the behest of the NDP, wanted to know why Canadians were forced to pay a fee of $1 to $2 for withdrawing cash from a machine owned by a bank at which the customer does not have an account. The NDP is making ATM fees a cornerstone of its economic agenda.

Protti - in one of his last acts as CBA president before retirement - was under attack for most of the one-hour session, with MPs demanding to know why banks have closed branches, and criticizing the lack of ATMs in rural Canada and lower-income pockets in urban centres.

Liberal MP Robert Thibault pressed Protti on whether there was collusion among the banks regarding ATM fees, given most banks charge Canadians $1.50 per withdrawal from an ATM operated by a bank other than their own.

"If there is no collusion, why are the prices so similar?" Thibault asked.

Protti said banks are competitive for ATM business, and the fees charged vary - much like the cost of a loaf of bread from grocer to grocer, or a price of a subcompact vehicle from dealer to dealer.

For instance, he cited the Desjardins network in Quebec, which increased its ATM fees for non-customers to $2 from $1.50. Also, white-label machines - those not owned by a financial institution - generally charge $3 to $4 per transaction, although it can be "much, much higher" if the generic ATM is located at an adult entertainment club. (Protti said he wasn't sure how high it was because he does not frequent such venues.)

Protti said an estimated 75 per cent of transactions at bank-owned ATMs are fee-free, suggesting Canadians tend to use machines owned by their bank. The NDP has said banks pull in roughly more than $400 million in profit from ATM fees. Protti said that figure was incorrect, and was close to $153 million, or roughly a fraction of one per cent of total profit from the country's banks.

Financial Post

© CanWest News Service 2007