Cash at a cost as privately-owned ATMs fill gaps

By Susan Edmunds

Your bank might have stopped offering an ATM in your neighbourhood - but there’s a good chance a private provider has replaced it.

As the number of bank-run ATMs shrinks – hundreds have closed around the country in recent years – they have been replaced in many areas by those provided by providers such as Next or Allpoint.

Reserve Bank data shows in 2011 there were 2489 bank-owned ATMs, but this dropped to 1440 last year.

But while most banks no longer charge a fee for withdrawing cash from another bank’s ATMs, the privately-run machines often charge about $2.50 or $3 for each transaction.

Reserve Bank director of money and cash Ian Woolford said the move by banks to stop charging the transaction fee to other bank customers had led to a reduction in ATM numbers.

“There is a lot of change at the moment as Allpoint, an NCR subsidiary, takes over some bank ATMs.”

Massey University banking expert Claire Matthews said people were using less cash, which meant banks saw less need to provide ATMs and could not justify the cost.

“Private providers see a gap that is profitable because they charge a fee – and I think they have a lower break-even threshold as a result too. 

“They can go anywhere, whereas banks tend to prefer to have them at their own premises, which gives greater convenience for users. 

“They then get used to them in preference over bank ATMs, contributing to the reduction in bank ATMs. 

“However, the fee can be seen as a ‘tax’ on those on lower incomes who may be more likely to use cash,” Matthews said.

Next spokesman Wibo Basoma said banks wanted to reduce their costs, and turning to other ATM providers was part of that.

“The cost of cash is increasing non-stop. We are providing an additional service for a cardholder to still access their banking facilities.”

He said the ATMs were always clear upfront about the charge that might be associated with a transaction.

“Out of that (charge), we pay the switching fee, the telecommunication fee, the cost of the cash terminal. There are multiple levels of costs – it’s a user-pay scenario to really make it work.”  

Basoma said he expected to see it happen more as banks focused on their core branch business.

Consumer NZ spokesperson Jessica Wilson said it was disappointing people using non-bank ATMs faced high fees to access their own money.

“But having said that, it’s crucial that people have the means to withdraw cash if they need to."