The ATM market in Australia is set for a major shake-up in March
2009, when reforms by the Reserve Bank of Australia (RBA) will take

The package of amendments, which has been in discussion among
industry players for some time, had been instigated by the
country’s central bank almost a decade ago. The reform will see
customers pay differently for ATM transactions, and ban interchange
charges between financial institutions. The reform also imposes a
cap on the fee that existing institutions charge new entrants for
establishing ATMs.

Australia: Average cost to ATM operator of providing cash withdrawal‘Direct charging’ – the
industry initiative – was embarked upon in response to the RBA’s
calls for more transparency in charges to cardholders for using the
26,500 ATMs in Australia. The RBA said that failure to voluntarily
implement these reforms would result in regulation, which the
industry argued it did not need, much preferring an industry-based
solution. But the central bank was requested to provide legal
certainty to the reshaping of the market.

Currently customers in Australia only pay a ‘foreign ATM charge’
– typically a transaction fee charged for using an ATM not owned by
the cardholder’s own financial institution. This fee covers a
charge from the ATM owner, the financial institution or other card
issuer for processing the transaction fee, among other costs. The
total fee may amount to anything up to A$2.00 ($1.30) and appears
on the cardholder’s monthly statement.

But many interbank transactions are free of charge as banks
absorb the charges in order to keep ATM access free for

What is changing?

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Only those users who use ‘foreign’ ATMs will be affected and
they will know what they are charged up-front before proceeding
with the transaction. This will let them choose whether to use the
ATM and pay the fee shown, or cancel the transaction and go

A technical aspect of the reform sets ATM interchange charges
set at zero. This means that there is no case left for banks to
charge ‘foreign’ fees. The restructuring forbids any agreements
between financial institutions that would restrict competition and
will result in the breach of the Trade Practices Act (TPA).

The RBA says that making the charge more transparent will place
downward pressure on the ATM market’s charges. The charge may also
act as an incentive for ATM deployers – and many more may join the
market, providing choice and convenience to consumers. The central
bank believes that without the reform, deployers found the
installation and upkeep of ATMs uneconomic. But the reforms do not
compel the ATM owners to levy charges.

The RBA suggests that smaller financial institutions may enter
into agreement with larger networks to provide fee-free access.

Many consumers managed to get around the fee by banking only
with institutions which provided fee-free access. For example,
Citibank or Suncorp offered free access to all ATMs (except in
Queensland where the use of non-Suncorp ATMs incurs a fee for
Suncorp customers). But with the new rules this could change.

A necessary update

The ATM and EFTPOS (electronic funds transfer at point of sale)
systems used for processing card transactions through terminals at
points of sale need modernisation, the RBA says. The central bank
thinks that new entrants should have a central point of access, and
the current bilateral nature of payment systems means that to join
the system they need to establish connections with each
institution. The time frame provided by the bank before it steps in
to push its recommendations is set at March 2010, by such at time
when it expects the industry to have made ‘substantive’