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Court ruling increases likelihood of ATM surcharges in Iowa

Date 11/30/2000 12:00 AM | Topic: News

In addition to any ATM fees assessed by your financial institution, there is a good chance that the Iowa ATM owners will charge users of their ATM machines for transactions, said Gary Peterson, chief executive officer of Financial Plus Credit Union in Des Moines.

Right now, Peterson said Iowa is the only state in the nation that does not allow surcharges, but he predicts that will change sometime this calendar year.

"I'm guessing like everybody else," Peterson said.

A court ruling this summer established a precedent, ruling that federally chartered financial institutions do not have to abide by state codes, Peterson said.

If financial institutions start surcharging in Iowa, Peterson does not know if the state will challenge the predicted trend.

According to Peterson, now that federally chartered financial institutions will probably start surcharging in Iowa, state financial institutions, not wanting to be at a disadvantage, will soon follow suit.

"I think it will be like dominos falling when it starts to happen," Peterson said.

When asked whether people with accounts at the financial institution owning the machine could use the machine for free, Peterson said, "Generally that's the case, but it's up to the financial institution."

ATM machine users are not the only ones charged for their ATM use. Financial institutions are also charged for ATM use by Shazam, the maker of Iowa ATMs.

Financial institutions face charges for both the upkeep of their ATMs and for every transaction, from an inquiry to a withdrawal, done on the cards they issue.

Peterson said, "Everybody complains about fees, but who do they want to pay for it?"

Peterson said ATM charges to a financial institution are smaller than the cost when people come into the financial institution to do a transaction.

According to Dave Cale, vice president of FPCU, credit union members do about 30,000 transactions per month at the ATM machine.

Peterson said, "If we had all those people come into our office every day, we couldn't do it."

"The problem is people using the ATM will use it more frequently because of convenience, so it's kind of a double-edged sword," Peterson said.

The problem of frequent ATM use is an especially big one with college-age people, Peterson said. Instead of getting 50 dollars once to last them a week, students will go to the ATM machine five times to get 10 dollars or 10 times to get five dollars.

Financial institutions that charge for ATM transactions are encouraging people to do larger ATM transactions less often.

Fees are usually charged to generate such desired behavior, Peterson said.

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Jenny Welp
Chips Staff Writer

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