Reserve Bank tips slide in ATMs

Clancy Yeates
August 23, 2015
The Age
The Reserve Bank has predicted a decline in the number of automated teller machines, as digital payments allow consumers to make fewer cash withdrawals and avoid pesky fees.
Banks and other owners of ATMs say their returns from the machines are being crunched, as they spend more money on maintaining machines that are being used less.
ATMs were introduced widely in the 1980s and there are more than 31,000 cash machines around the country now, which the RBA says is high relative to Australia’s population.
However, the number of withdrawals has fallen by about 20 per cent since from a 2009 peak. This has occurred as more shoppers use cards, including contactless payments, where they would have previously paid in cash.
In a submission to a Senate inquiry looking at credit cards and ATM fees, the RBA says declining use of cash will ultimately cause some ATMs to be removed.
“Looking ahead, it is likely that ATM numbers will begin to fall, given the observed decline in cash use and ATM withdrawals,” the submission said.
It cites a long-running move away from cash in favour of cards, pointing to figures showing consumers used cash for 47 per cent of payments in 2013, compared with 69 per cent in 2007.
Avoids a fee
When customers do need cash, a higher share of them are also accessing it in a way that avoids a fee of $2 or more for using an ATM that is not owned by the customer’s bank.
The RBA said the average fee for a “foreign” withdrawal was $2.33, up from $2.04 in 2010. The increase was in line with inflation over this period.
Fifty-five per cent of the ATMs in Australia are owned by specialist ATM companies, while banks and other financial institutions own the rest.
Despite the gradual decline of cash, specialist ATM businesses drove a 14 per cent increase in the number of ATMs between 2009 and 2012, as they took advantage of new rules allowing them to set their own fees for withdrawals.
The rule change lifted the number of machines in small stores or clubs, as well as in some “low-traffic” locations and at festivals or other big events, the RBA said.
Now, however, these operators are feeling the crunch of lower withdrawals. The Independent ATM Industry Group said the volume of ATM transactions in the year to May was the lowest yearly total since 2003.
Considerable challenges
“This shift in consumer behaviour presents considerable challenges for the industry, which IAG members are currently tackling,” the lobby group’s submission said.
The country’s two biggest banks also signalled their revenue from ATM fees was being hit as more customers used alternatives such as contactless payments or eftpos, which does not include a fee for cash withdrawals.
The Commonwealth Bank said it made $54 million a year in revenue from ATM fees, while it cost $160 million to maintain the network.
Westpac said ATMs made a “net negative contribution”, with costs from maintenance and security rising at the same time as customers used the machines less.
“The combination of increasing costs and lower usage has resulted in the cost per transaction on an ATM increasing, with a high component of fixed costs associated with the deployment and operation of ATMs,” Westpac said.
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