ATM Council Sues Visa And Mastercard For Forcing Them To Charge Consumers Set Fees

Visa and Mastercard have been accused of price fixing in a lawsuit filed Wednesday by the the National ATM Council. The suit alleges that nonbank ATM operators could charge customers lower ATM fees when they use other, cheaper payment networks, but are prevented from this by the set access fees Visa and MasterCard charge.

The ATM owners would like to be able to “put a sign on their cash machines, for instance, saying the fee is $2 for Visa or MasterCard, but $1 for cards using other networks,”reports the NYT. They could then give discount rates for customers who were engaging in less-costly behavior for the ATM owners.

The suit says that “[b]y restricting their ability to attract customers to lower-cost A.T.M. services through lower prices, the A.T.M. restraints put a competitive straitjacket on A.T.M. operators.”

Visa and MasterCard declined NYT’s requests for comment.

A Different Skirmish Over A.T.M. Card Fees [NYT via @felixsalmon]

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  1. mauispiderweb says:

    I like using the ATM in McDonald’s … 99¢

  2. Phil Keeps It Real [Consumerist] says:

    I like walking around with my bi-weekly pay in my pocket….straight CASH !

    • lxa1023 says:

      I like to rob Bill every two weeks.

    • DariusC says:

      So does that mugger standing outside of your morning coffee shop. He likes it a lot more than you will :)

      • StarKillerX says:

        Actually the mugger is far more likely to be waiting outside the atm your using the coffee shop Bill is in.

    • Difdi says:

      Yeah, and if someone with an ATM card loses their wallet or gets mugged, they phone in and cancel their card, and the thief gets nothing, while the card owner gets inconvenienced for a week or so.

      If YOU get mugged, or lose your wallet on the other hand, you’re screwed.

      Different risks doesn’t necessarily mean reduced risks or no risks, after all.

  3. Rebecca K-S says:

    How common are ATM cards that aren’t Visa/MC nowadays?

  4. StarKillerX says:

    Since these ATM operators are not forced to use the Visa/MC network I don’t see where they’re complaint is valid.

    • bendee says:

      But then they risk losing the vast majority of people, b/c Visa/MC are forcing an across the board fee. Plus, if there were a two-tier (or more) fee system, more people will likely find and use cards that are tied to a cheaper issuer, making this issue anti-competitive in two ways.

      • StarKillerX says:

        True, I am not saying it isn’t a problem just that their complaint isn’t valid.

        Simply what it boils down to for me is why should Visa/MC allow people access to thier system while they are promoting other competing systems?

        • frank64 says:

          You are promoting the way Visa and Mastercard have been able to get around the monopoly issue. There are technical alternatives, but these alternatives don’t work in practice. Merchants cannot service without taking their cards, and if they take them they are very limited in what they can do. Like they cannot give incentives for patrons to use a less expensive service.

          Visa and Mastercard compete in how much they can offer the banks per transaction, not on pricing for the ultimate consumer.

        • RvLeshrac says:

          Excellent idea. We should just allow monopolies and duopolies to eliminate all other businesses, so they can charge as much as they want and prevent anyone else from providing better service.

    • barbcole says:

      Yes, they are forced to use Visa/MasterCard. The linked article actually really didn’t do a very good job grasping the issue and it came out a bit distorted.

      Look on the back of your ATM card. Many cards have more than just the main network that they’re capable of supporting. Usually there are several more smaller regional ones that aren’t even listed on the card, but are usable through peering arrangements.

      But if they ATM operator wishes to have the ability to accept Visa/Mastercard network cards, they are prohibited from steering cards that are capable of other networks also to alternate networks.

      And, of course, the routing arrangements between banks are set to go through Visa/Mastercard (the most expensive) as primary.

      The ATM operators want the ability to accept Visa/Mastercard network cards when necessary, but also be able to steer people to other networks when it’s less expensive.

      Similar to how (until last year) merchants would be prohibited from trying to steer you to a less expensive payment card — i.e. if you presented an expensive rewards card they couldn’t ask if you would be willing to pay with an XYZ card that costs them less. They still can’t refuse if you say no, but now they can ask.

  5. SecretAgentWoman says:

    How many ATM cards out there are not Visa and MC branded these days?

    • Phil Keeps It Real [Consumerist] says:

      Riddle me this :
      How much wood would a woodchuck chuck if a woodchuck could chuck wood?

    • KainCooper says:

      I actually had to request one from my local bank. They give you the mastercard one by default. A friend of mine went in and had bad credit so they gave him a regular atm card that was just for atm with no mastercard logo.
      I do most my banking with a bank in another state but use there card for my purchases. It looked similar to the other card and I had used it by accident a few times.

  6. Hi_Hello says:

    wawa – free atm.

    I don’t expect to pay to use an atm.

    The sign would not do anything if I’m in a situation where I need to use an ATM and have to pay for it.

  7. Costner says:

    This is how the free market is supposed to work! Companies should address their concerns with one another and if need be the legal system should get involved. The government should only be involved to the tune of ensuring fair trade practices are followed and laws aren’t broken, but they should not simply pop up out of the blue and say a company can only charge X amount for their service provided there is a free market with competition.

    • psm321 says:

      What do you think gives them cause for action in this lawsuit? Probably some anti-monopoly law. From the government. Interference with the free market. Or are you going to claim that they’re suing over a common law tort?

      • Costner says:

        I’m all for government regulation when it comes to anti-monopoly laws etc… but when they get down to specifically (and arbitrarily) dictating pricing… that I have a problem with.

        At least when government dictates pricing on a utility it has to go through detailed analysis on costs, profit, growth etc typically done through a public utilities commission. Even after a decision is made the utility can appeal, or if other costs are found later they can file a new request. With debit card reform there is no such commission – no detailed analysis – no appeals process. It is just government dictating to the letter (or in this case to the cent) of how business can operate. That isn’t a framework – that is specific control with no concern over actual impact to the marketplace.

        I guess what bothers me most is that when you actually learn how they came up with their pricing it was almost as if they pulled it from a hat. Add in that merchant trade groups essentially wrote the legislation and the whole thing just stinks of underhanded “make you feel good but actually do nothing” politics.

        • psm321 says:

          I think for once I actually might agree with you. I’m not sure why some retailers’ association didn’t just go sue over monopoly laws.

        • ChuckECheese says:

          You must be one of these pubescents who are new to existence who don’t realize that throughout history and in every land, there have been wage and price laws passed to control monopolistic practices while still allowing business and the general consuming public to thrive.

          In the case of banking, it is clear that banks nearly destroyed the world economy with their profiteering. Limiting banks, who already enjoy very healthy profits, from charging extortionary fees to end-users is quite a lot less than is needed at this time, really. And it’s quite astounding that you cannot conceive of a world where people sometimes need to be reined in to prevent them from going butcher baby on the banking and investment worlds, bondholders, property owners, and the social contract.

          • Costner says:

            Yes it was banks and banks alone that “nearly destroyed the world economy”. If that is your version of history it is doubtful anyone will convince you otherwise so obviously anyone who was greedy in any way was part of a “bank”. Pay no attention to the entire nations who overextended themselves, the decades upon decades of record deficit spending of numerous others including the US, or the investment houses (not banks) that were buying and selling products that had no true value, or tens of millions of individuals who either used their mortgages as personal piggybanks, or who bought these mortgage backed securities or other investment products in the hopes they could pad their 401(k)s or investment portfolios, or even those who were living off credit cards and HELOCs over the past ten years in the hopes their homes would appreciate at 20% a year so they could somehow make it all work.

            Nah… it was all those damn banks.

            Oh and obviously we need to determine what constitutes “healthy profits” and then ensure we somehow limit what this amount is. Of course it doesn’t matter that the actual percentage of profit of these very banks we are bitching about are less than many other industries… but clearly it is too much. Oh and the fact that several big banks including BOA have lost money over the past few years… oh that doesn’t matter. The fact that banks don’t actually have a monopoly of any type doesn’t matter either, and we need to ignore the fact that unlike a utility company or medical provider nobody is forced to use a bank or any of their services. Those damn banks still have “healthy profits” that must be taken from them. We wouldn’t want to reward success or good business obviously because no company has the right to make “healthy profits”.

            Of course this means we also need to determine what is a “healthy salary” for an individual, and surely we need to limit how much a person can make per year because if it works for companies it only stands to reason it should work for people too. Therefore if you make more than 15% above the average salary in the US you’ll have to give a bit of that up because obviously you have no right to anything extra.

            /s

    • frank64 says:

      I mostly agree, except in the debit fee scenario I think they had a problem with normal politics and making the law hold up to legal challenge. It wasn’t the best solution, but it may have been the only one they thought would work.

      From what I recall, for some reason the merchants were not able to band together due to collusion laws.

  8. ninjustin says:

    If there is not competition then well Capitalism isn’t working anymore.

  9. Coalpepper says:

    Chuckles, “I’m surprised they’re doing this, i remember hearing that a few years ago WalMart sued Visa and Mastercard for a similar practice. You’d think Visa and Mastercard would learn from this.

  10. Bardiel says:

    I just came back from a weekend at the Texas Renaissance Fare. ATM fees were 6 dollars a pop. I looked at the machine and said Oh My!. Popped my credit card out and went to a bank ATM to only pay a 2 dollar fee. Price gouging anyone? Come to get a ATM that is foreign company to you and pay out the wazoo!