You’re at a bar on a Saturday night. There’s a cute girl (or guy) standing nearby that you’d like to buy a drink. Problem: it’s a cash-only bar. Solution: the ATM, which probably comes with a $2 or upwards surcharge.
But what if the ATM isn’t there?
Small business owners who deploy ATM machines to places like bars and restaurants may be forced out of business if Congress passes an amendment by Sen. Tom Harkin (D.-Iowa) that would cap ATM fees at 50 cents. In a Huffington Post op-ed, Harkin argues that the surcharge people pay to use ATMs benefit "the big banks, the big card networks, and independent machine owners."
Kurt Helwig, president and CEO of the Electronic Funds Transfer Association, said capping the ATM fees at first sounds palatable to the consumer – after all, who wants to pay an extra $2.50 to draw out their own money? – but the amendment ultimately hurts the consumer because he predicts there will be fewer ATMs in convenient locations.
John McKee is a small business owner who makes his living deploying ATM machines independent of the banking system. He said the new amendment would definitely put him out of business and have a backlash effect on the people who process the transactions and the manufacturers of the ATM machines.
"It definitely affects small business first and foremost. We’ll definitely be out of business if this goes through," said McKee. (McKee is married to the niece of Tom Phillips, chairman of the Eagle Publishing, Inc., the parent company of HUMAN EVENTS.)
Harkin cites a study that places operating costs at only 36 cents per transaction, but McKee said that’s definitely not his business’ cost.
To deploy an ATM machine at a restaurant, for example, McKee says they have to purchase the machine (usually a couple thousand dollars) and maintain it. Often, it’s the company’s money inside the machine.
"The money that’s in the machine – that’s the real cost," McKee said. "We’re tying up tens of thousands of capital."
For McKee, the surcharge is how he makes a profit, and he says he’ll charge $2 to $3 depending on location. About 60% of the approximately 425,000 ATM machines in the United States are independently owned and operated, estimates Helwig.
McKee says Harkin may be looking only at processing costs, but the overall cost is much higher.
"I think a lot of these kinds of actions are well-intentioned," Helwig said of Harkin’s amendment. "But I think the unintended consequences of actions such as these in fact could be detrimental to consumers."
McKee said the amendment is basically price fixing by the government, and Helwig says this issue comes down to free-market principles. Both pointed out consumers have several options for withdrawing cash if they’re unhappy with the surcharge, such as taking out cash via debit card transactions or using their own bank to withdraw money.
"The markets should decide this, and not Congress," Helwig said.
Mike Lee, CEO of the ATM Industry Association, has a similar outlook.
"Why would the American government engage in price control in a free-market economy, especially when its cost analysis of ATM transactions is off the mark?" he said in an email to HUMAN EVENTS.
Helwig and Lee sent a letter opposing the amendment to senators, and McKee said he’s also called his state senator and that other independent distributors nationwide are doing the same. EFTA and ATMIA also conducted an online petition opposing the amendment and delivered it to Senators Chris Dodd (D.-Conn.) and Richard Shelby (R-Ala.), respectively the chairman and ranking member of the Senate banking committee. As of May 19, the petition had 3,565 signatures.
Harkin, whose office did not respond to questions for this article, is currently trying to pass the amendment as part of Dodd’s financial reform package in the Senate.