Are your ATM fees driving away cardholders?

Continuing growth in the use of smartphones, debit cards, and credit has turned "cashless" into a buzzword in Western culture.

Enthusiasm for a currency-free future is further spurred by hype surrounding virtual currencies; by Sweden's attempts to eliminate the kronor; and by a recent uptick among restaurants in the United States switching to a cash-free model.

Following this lead, some banks and credit unions are also eyeing the gradual elimination of cash.

While not as drastic as Swedish banks (which, in most cases, refuse to deal in currency at all), U.S. financial institutions are increasingly pushing their debit and credit card options while drawing emphasis away from cash-intensive channels such as the ATM.

This deemphasis  has become a snowballing trend among financial institutions and has led to increased out-of-network and, in some cases, in-network ATM fees for accountholders who find themselves with fewer fee-free ATM options.

A digital currency nightmare?

While excitement about the idea of a digital payments future is not unwarranted, security and consumer preference in such a system is not quite yet up to the hype. In fact, more than one third of American adults age 18 to 37 do not have a credit card and 44 percent report that they would be unwilling to stop using cash.

Additionally, while fast-casual chains like Sweetgreen have found success going cashless in larger cities, 42 percent of consumers who buy food at chain restaurants report that they would go less often or not at all if cash payment were not an option.

Economic stability and security can also be issues in a cashless society. For instance, Sweden's move toward a cashless system is cutting out Riksbank, the country's central bank, in favor of commercial payment systems. However, commercial systems do not utilize the standard kronor — meaning that funds spent and procured within these system are not guaranteed by the state.

"This system could easily be disturbed or manipulated," Bjorn Eriksson, a former Swedish National Police commissioner and president of Interpol, said in an interview with The Guardian. "Why invade [Sweden] when it's so easy? Just cut off the payment system and we're completely helpless."

Consumers insist on fee-free ATMs

Underscoring consumers' continuing expectations of fee-free ATM access, Capital One Bank is headed to court as the defendant in a class action suit lodged by its own customers, who allege that the bank imposes unfair fees on ATM transactions — including balance inquiries — at both in- and out-of-network ATMs.

Recent studies offer further confirmation that cardholders still want convenient, fee-free ATM access. In one study, 79 percent of respondents said that having surcharge-free ATM access is "very important" or "essential" to their banking needs — even more so than having a branch nearby.

Mobile banking users also show a preference for the ATM, with 54 percent reporting an overall increase in visits to cash machines.

Similarly, 66 percent of millennials say that they will go out of their way to avoid ATM fees — even to the point of switching financial institutions. Indeed, among consumers who do switch banks more than half report making the decision due to high ATM fees.

Cash may well be on its way out, but that journey looks to be slow, tedious and accomplished in fits and starts. Consumers can see the writing on the wall and are buying smartphones, checking out mobile wallets, and experimenting with alternative payment vehicles and avenues.

At the same time, they're learning about the need to be attentive to security, and to insist that it must go hand in hand with convenience.

And, perhaps above all, they continue to insist on options, availability, and free access to their money. And they aren't afraid to find a bank or credit union that will meet their demands.