A new industry trend report shows a marked preference among consumers for fee-free ATM access. In fact, seventy-nine percent (79%) of respondents stated surcharge-free (SF) is “very important” or “essential” for their banking needs. Fee-free ATM access was even more important to survey respondents than nearby branches.
This change in consumer interest is pushing banks and credit unions to close traditional branches and convert to more convenient access points such as digital/mobile and the ATM. The growing switch from physical to digital is more than just a new wave of technological change. It is beginning to directly affect ATM transaction behavior.
Surcharge Revenues in Decline
Surcharge transactions have been the source of revenue for ATM operations since their initial implementation in 1988. Recent transactional data, however, shows an average decline in surcharge transactions of around 3% per year.
ATM users have long been on the lookout for free access to their money – opting to bank with financial institutions based on their large ATM networks and/or surcharge reimbursement programs. Now, however, surcharge-free is becoming more of an expectation than an added benefit. Research from Pew and BI Digital Banking reports sixty-six percent (66%) of Millennials refuse to pay a surcharge and seventy-one percent (71%) of general consumers purposely avoid paying ATM surcharges. In addition, some fifty-nine percent (59%) of consumers actively seek out ATMs in SF networks. With such a preference for surcharge-free, the current 3% decline is expected to grow exponentially as financial institutions continue to redirect their distribution through SF networks and/or ATM access partnerships.
Customers Seek Surcharge-Free Convenience
Additional SF distribution influences more than the consumer’s choice on where to access their cash and accounts. ATM selection is also a primary factor in where they choose to get gas, buy coffee and snacks, go shopping, and pick up their prescriptions. Customers making the choice to utilize SF ATMs will change their behaviors and shopping habits accordingly. Locations with ATMs that do not offer a surcharge-free option risk losing more than a surcharge – they risk losing current and potential customers.
Adapting for the Future
While surcharge transactions may be on the decline, customers who use on-site ATMs are still more likely to make in-store purchases. In fact, studies have shown that ATM users spend on average 20-30% more money in the location that houses the ATM. As more financial institutions partner to push distribution to convenient ATM locations, there is greater opportunity for site owners to take advantage of these partnerships to develop additional visitors, increase store sales, and generate a larger customer base within their communities.
The current push to eliminate physical banking branches in exchange for mobile, digital, and ATM access is creating an increase in SF access opportunities for consumers. As physical access points become fewer, cardholders have begun to be more aware of convenient options for the ATM – avoiding surcharges whenever possible. While ATM surcharge transactions are predicted to sharply decline over the next decade, those locations who look to embrace the latest in banking trends could turn a surcharge slump into a revenue generation engine.