135,000+ Aussies on Facebook rally against ATM Fees in an online social movement

We have observed that a Facebook fan page named “I Hate Two Dollar Fees at ATM’s” has grown at an explosive rate in the last 24 hours, with just over 36,000 fans at 12.30pm to well over 100,000 fans this morning in less than 24 hours.

ATM fees are the real bug bear. If you withdraw $100 from a rival bank’s ATM you will be charged around $2 in ATM fees – that’s 2% in ATM fees for spending your own money.

Recently released RBA research shows that there has been a 10 percent increase in customers using their own own bank’s ATM machines. Consumers are also shifting to debit card products in an attempt to get out of debt and steer clear of paying their banks interest and fees for using their credit cards.

What is a Foreign ATM Fee?

According to the Reserve Bank of Australia “A ‘˜foreign ATM’ is any ATM that is not owned or operated by the financial institution you bank with. A foreign ATM, for the purposes of direct charging in Australia, is not an overseas ATM.”

How have foreign ATM fees changed to cause such a stir?

That fee was then often passed on to you as a ‘˜foreign fee’ which would appear in your statements. The idea of the ATM reform was to let competitive forces take hold, resulting in lower fees for consumers. Direct Charging has seen the most visible change as a result of the ATM Fee Reform, increasing transparency of ATM fees.

What is Direct Charging?
According to the RBA “It is a more transparent way of charging for ‘˜foreign ATM’ transactions. So when you use a foreign ATM, you will see a screen that will tell you how much you will be charged for the transaction. You will then have the choice to cancel the transaction without charge if you think the fee is too high and prefer to use a cheaper ATM nearby.”

Now when you make a transaction at a foreign ATM, the ATM provider themselves will charge you as opposed to charging your bank, who would previously pass the charge on to you.

Another key reform is that the fee imposed by the ATM provider must now be displayed when you either check your balance or make a withdrawal.

Australians are now more educated about how much they are being charged. In areas with less ATM machine (rural areas, casinos, pubs, and clubs) there would generally be less competition, and this could result in higher fees. Also, there are just over 26,500 ATM’s in Australia of which only 43% are bank-owned, meaning that many Australian’s aren’t aware of the fees charged by independently-owned ATM’s until they actually have to use them.

To avoid foreign ATM fees, you can simply withdraw from your own financial institution’s ATM. This is easier said than done – for those who live in rural areas, or are visiting pubs, clubs and festivals, the only option may be a rival bank’s ATM. In some instances you can cop a $2.50 fee to check your balance, then another $2.50 fee for a cash withdrawal from a rival bank’s ATM machine.

In response to Australian consumers complaining and venting their frustration against bank fees, the major banks (ANZ, Westpac, St. George, CBA, and NAB) have slashed or completely removed their fees.

While the fee cuts aren’t targeting ATM charges directly, they’re certainly a start. NAB for instance have completely cut overdraft fees from over $30 to no fee at all. Westpac and St George have followed similar suite by reducing a range of their consumer and business fees to $9. The fee cuts are no small move by the banks either – overdraft and late repayment fees along yield over $1 billion dollars in revenue for NAB alone. ANZ made the late announcement following the other banks, also dropping over 27 of their penalty fees.

Debit cards are increasing in popularity with consumers trying to avoid getting in to extra debt, with credit card debt falling at the fastest rate in 14 years.

Consumers like having the convenience of a debit card which gives them the ability to shop online using their own money, without taking the risk of getting in to credit card debt. Also, the recent release of the MySpace Recharge Pre-Paid Visa is another example of banks and social networks realising that consumers need convenient payment options available to them, that don’t have the same risk associated with them that credit cards do.

We have also seen an exponential increase in the awareness and applications for balance transfer credit cards, an option available to consumers where than can pay as little as 0% p.a. interest for 6 months on their existing card balance. This is another great example of consumers trying to avoid interest and fees

Australian’s are missing out – comparison of Fee-Free Bank Accounts

There is however a light at the end of the tunnel, with some banks in Australia offering fee-free banking accounts.

The Australian Banking Association released its ‘˜Fees for Banking Services 2009 Report‘ in May 2009 which found that an estimated minimum of 33% of total fee revenue collected from households could be reduced if consumers changed their banking behaviour. (Assuming no change to bank fee structures.)

Most bank will charge fees for using a rival bank’s ATM Machine – there are however some exceptions.The Bankwest Zero Transaction account waives CBA, Westpac, NAB, and ANZ branded ATM fees if you deposit $2,000 or more in your account each month.

>> Our guide to avoiding foreign bank ATM fees

>> View our comparison of Fee Free Bank Accounts

Related posts:

1. Consumers Avoid Rival Bank ATM's To Avoid Fees
2. NAB Pushes Competitors To Rethink Bank Fees
3. RBA To Continue Regulating Bank Fees On Credit Cards
4. NAB Scraps Overdraft Fees Saving Customers Almost $1 Billion A Year
5. Credit Card Bank Fees Up 8% – Banks Blame Consumers