Are surcharge-free ATMs inevitable?

Recently, I attended a local concert called Louisville loves Nu-metal, a show that gathers local artists to cover hit songs from popular nu metal artists such as Disturbed, Slipknot, Limp Bizkit and more. I arrived early at the event as it was in a busy part of town and I wanted to make sure I found a good parking spot. Unfortunately, when I arrived, I was informed by an attendant that parking was $5 and it was cash only. Since I didn't have the cash on me, I would need to go to an ATM. The attendants told me of an ATM nearby, but I knew for a fact that the ATM they mentioned would charge me a fee. So, I looked up to see if my bank was nearby and luckily it was, so I was able to use that ATM, although it may have been a bit further out of my way.

This experience is hardly unique. Customers hate ATMs and will often go to great lengths to avoid them, either by only using ATMs in their banks network, making use of ATM fee reimbursement programs at their bank or even asking for cash back on retail transactions. It's easy to see why consumers try to avoid fees. It can be frustrating to pull out $30 and be hit with fees as high as $5 per transaction. It can feel as if you are being punished for the luxury of using a payment method, especially when in many cases, users can pull out cash for free.

Intriguingly, while banks are eliminating many fees, such as overdraft fees, ATM fees are actually growing. A study by Bank Rate found that the average fee for an out-of-network ATM transaction hit $4.73 this year, the highest since 2019.

"ATM fees are biting harder than ever as the cost of out-of-network withdrawals hits a new record high," Greg McBride, chief financial analyst, Bankrate, said in the report. "But with less need for cash and expansive ATM networks that make it easier than ever to stay within network, the fees are easily avoidable and need not be a frequent drain on your bank account."

For me personally, I try to avoid ATM fees whenever possible. Although I understand that banks may argue such fees are necessary, as a consumer, it feels like an unfair charge, such as buying tickets for an event on Ticketmaster and being charged exorbitant fees.

However, there are also more options for customers than before to avoid fees, such as the Allpoint Network, which offers surcharge-free access to cash at more than 55,000 ATMs worldwide. By downloading an app, customers can see all Allpoint ATM locations to find an ATM. In addition, Allpoint+ ATMs offer cash deposit capabilities. Recently, California Credit Union and North Island Credit Union joined this network.

Last year at the Bank Customer Experience Summit, Clinton Chenge, VP, global head of Visa/PLUS ATM Network, Visa, said that overall, 85% of ATM transactions are in-network and only 15% are out of network, and that banks should eliminate ATM fees as a way to improve the overall customer experience.

"We want to see more ubiquity, more self service for everyone which would allow banks to focus on what they do best: servicing their customer," Cheng said.