David A. Balto[1],  ATM SURCHARGES: PANACEA OR PANDORA'S BOX?

 

    12  The Review of Banking and Financial Service 169 (October 9, 1996)

 

 

 

 

 

The most controversial issue facing ATM networks and their members is ATM surcharging -- the practice of ATM owners assessing an additional fee to ATM cardholders of other banks for use of their ATMs. Although ATM surcharging has existed in some form for almost a decade, the implications of widespread surcharging for consumers, banks, nonbank ATM deployers, and ATM networks are not clear. On its face, ATM surcharging may appear to provide a new revenue stream to make ATMs an even more attractive source of profits and lead to more ATM deployment. Moreover, it will end a decade-long series of costly antitrust cases challenging network surcharge prohibitions. Yet the effects of ATM surcharging may not be so salutary, especially for small banks and consumers. Congress and many state legislatures are considering legislation to prohibit or regulate ATM surcharges, or to impose consumer protection disclosures. The purpose of this article is to discuss the impact of ATM surcharging on consumers, financial institutions, and ATM networks.

 

BACKGROUND

 

When banks first deployed ATMs they did not charge their cardholders, primarily because it was perceived as a cost savings device. Banks soon began to recognize the benefits of sharing their ATMs with other banks and formed shared networks. Initially bank members did not charge their cardholders for ATM usage at the ATMs of other network members.  

 


    ATM networks require some fees in order to operate. Generally, the fee structures adopted by ATM networks place the cost burden on the card-issuing institutions.  In order to encourage the deployment of ATMs, networks require the card-issuing bank to pay a fee to the owner of the ATM. This fee -- the interchange fee -- is set by the network and is intended to compensate ATM owners for the costs of handling network transactions and provide an incentive for ATM owners to deploy ATMs and place their ATMs in the network.2 The interchange fee is typically set based on the ATM owner's cost of deploying the ATM and currently ranges between $ .35-$ .75 a transaction; some networks set a higher fee for ATMs not located at a bank branch (off-premise or non-bank locations).3

 

Many networks also adopted rules prohibiting their ATM owner-members from imposing any additional charge on the cardholder, commonly called a surcharge. There were two general reasons for these rules: by limiting the card-issuing bank's expense to the interchange fee, banks could accurately predict the costs of providing ATM access for their cardholders. In turn, this enabled banks to offer ''ATM access'' free or at a predictable price. Second, the interchange fee was intended to compensate ATM owners fully for the use of their ATMs by other members' cardholders.

 

Thus, the fee structures adopted by ATM networks placed the cost burden on the card-issuing institutions.  In order to recover the costs of the switch and interchange fees, some banks in the mid-1980s began assessing their customers a service fee for network (i.e., ''foreign'') transactions. Now this practice is common; many card-issuing institutions charge their customers ''foreign fees'' from $ .25 to $ 2.00 for using ATMs of other banks in the network, and some even charge for using their own ATMs (''on-us'' transactions). A recent U.S. PIRG study found these foreign fees have become very prevalent and costly to consumers -- averaging about $ 1.00 a transaction.4

 


However, many banks, especially small banks and credit unions, decided to absorb these costs in order to provide free or low-cost ATM access. Studies have found that these smaller institutions are more than twice as likely to offer free ATM access as their larger counterparts.5

 

During the 1970s and early 1980s the fee structure was relatively uncontroversial. In part, that was because banks both issued cards and deployed ATMs. Thus, there was relatively little attention paid to whether a bank was a ''net issuer'' (paid more in interchange fees than it received), or was a ''net deployer'' (received more in interchange than it paid). This balance began to change in the late 1980s when banks and non-banks (such as EDS and ACS) began to deploy ATMs at non-bank locations in order to acquire interchange and surcharge revenue. These locations were more expensive because they were not at bank locations.

 

These surcharge-hungry institutions turned to antitrust litigation and legislation to attack network rules that prohibited surcharging. In some cases, where ATM networks attempted to restrict these fees, they were faced with antitrust litigation charging that surcharge restrictions were illegal price fixing. Because private antitrust litigation can result in treble damages, these were high stakes battles.6 The two most prominent cases were in Texas and Nevada. In both cases a single member of the ATM network sought to assess surcharges at non-bank locations. Both cases were resolved by permitting the

members to engage in surcharging.

 

In 1988, First Texas Savings Association, which sought to deploy almost 1000 ATMs at non-bank locations in Texas, challenged the PULSE network interchange fee structure.7 First Texas sought to eliminate interchange fees altogether and replace them by permitting the ATM owner to charge surcharges. PULSE argued that elimination of the interchange fee or a system of surcharges would result in price gouging and consumer confusion. Although the arbitrator who decided the dispute recognized the validity of these concerns, he required that PULSE permit ATM owners to assess surcharges or provide rebates in order to avoid antitrust liability. PULSE soon amended its rules to permit surcharges.8


 

As soon as the PULSE litigation was complete, another revenue-hungry bank stepped up to the antitrust plate. Valley Bank in Nevada sought to impose surcharges in Las Vegas casinos. The PLUS national ATM network explicitly prohibited surcharges. Valley Bank sued, charging that the surcharge prohibition was illegal price fixing.9 In order to derail the litigation, Valley Bank lobbied the Nevada state legislature to enact legislation to prohibit ATM networks from preventing members from surcharging. When the legislation was enacted, PLUS challenged it on Commerce Clause grounds, but was unsuccessful. With the new law in place, surcharging became prevalent not only at non-bank locations in casinos, but at ATMs throughout the state.

 

The method for resolving the Nevada litigation established a de facto framework for those banks that wanted to surcharge. Based on the Nevada model, between 1990-95 approximately 14 states enacted legislation to permit surcharging (for a description of those laws see Appendix A). In most cases the legislation was prompted by the efforts of a bank or non-bank in a resort or vacation area to secure additional fees to deploy otherwise uneconomic ATMs. Since that goal seemed generally efficient and the impact on resident consumers seemed slight, the legislatures enacted these laws. Practically speaking, the chief beneficiaries of these laws have been EDS and ACS, which have deployed hundreds of additional ATMs at non-bank locations to acquire surcharge revenue. Currently, the average surcharge ranges between $ .50 to $ 2 a transaction, although it some resort locations it may be as much as $10.

 


In 1995 an ATM network finally prevailed in an antitrust case involving ATM surcharges, Southtrust Corp. v. PLUS System, Inc.10 Southtrust, an Alabama bank, sought to assess surcharges and challenged the PLUS network surcharge prohibition. Judge Sam Pointer, a very experienced and well respected jurist, held that the PLUS network surcharge prohibition did not violate the antitrust laws. Rather, he held that it was ''designed to enhance economic efficiency, and render markets more . . . competitive,'' and that the rule ''enhanced consumer welfare'' and reduced consumer search costs.11 In particular, he observed that since the PLUS network most likely would handle the transactions of travelers far from home, who were the most vulnerable to opportunistic behavior, PLUS had a legitimate basis for protecting its card holders through the surcharge prohibition.

 

Ironically, after winning the litigation, PLUS decided to abandon its no-surcharge rule. CIRRUS, the other national ATM network, and other networks quickly followed suit. Reportedly, PLUS changed its policy for two reasons: the number of states that permitted surcharges by law, and a sense that consumers wanted additional ATMs deployed at otherwise uneconomic locations.12 Perhaps there was a more significant reason for the network's change of heart. Some ATM owners had considered removing the PLUS mark from their ATMs in order to avoid the surcharge prohibition.13

 

The new surcharge policies became effective on April 1, 1996. They were received with a torrent of public controversy. Several Congressmen proposed legislation to control surcharges, and both the Senate and House Banking Committees held hearings on the new charges.

 

LIKELY CONSEQUENCES OF CURRENT SURCHARGE POLICIES

 

Banks, non-banks, ATM networks, and consumers all face a series of important questions about surcharges: what will the world with surcharges be like?  How will it impact banks, ATM networks, and consumers?  Is legislation or new regulation necessary?

 

Higher prices for additional ATM deployment

 

Proponents of surcharging suggest that consumers may benefit from increased ATM deployment -- noneconomic ATMs can be deployed in low-volume locations such as airports. Yet this benefit may be slight -- the ATM market is saturated and deployment has increased by over 20 percent in the past five years even in an environment where surcharges were basically non-existent.

 


Are surcharges necessary for ATM deployment at some low-volume locations, such as casinos, resorts, or airports? ATM owners already receive significant revenue in interchange fees that cover the costs for all but a few ATMs at high-cost locations.14 The most significant expense for deployment of an ATM is the location rent. Since the owners of these low-volume locations benefit from the ATM deployment, they should be willing to offer lower rental fees to encourage deployment. For example, many supermarket chains have deployed ATMs at their stores by offering advantageous rental fees.

 

Another approach to providing incentives for deployment at low-volume locations would be for an ATM network to provide a higher interchange fee for ATMs at these locations. Credit card networks have taken a similar approach to encourage the use of credit cards at grocery stores or other locations that might not support a higher interchange fee.

 

Ultimately the benefits from ''increased'' deployment at a relatively small number of ''low volume'' locations is unlikely to outweigh the increased costs to consumers. There is no reason why these surcharges will not migrate to the ''high volume'' ATMs consumers use every day. In fact, in those states that permit surcharges, 80 percent of ATMs surcharge, even though only 30 percent of the ATMs are at the non-bank, low-volume locations where surcharges are supposedly necessary to make deployment economical. Thus, consumers will pay a hefty fee not only for the new ATMs at low-volume locations, but also at the vast majority of ATMs where surcharges are unnecessary to encourage deployment.15

 

For example, in Louisiana the legislature permitted surcharging in 1993, and in Mississippi the legislature permitted it a year later. Surcharging permitted the deployment of a handful of low volume off-premise ATMs, primarily in casinos. However, surcharges were imposed not only at those ATMs, but also at almost 90 percent of the ATMs in the regional network.16 Thus, thousands of consumers who might never benefit from using one of these off-premise ATMs paid surcharges at their local ATMs. Did these consumers benefit from surcharges? 

 


The adverse effect on consumers may well exceed the benefits of a saturated ATM environment. It is important to note that the incentives of ATM owners and the card-issuing bank are dramatically different. The ATM owner has only a transitory relationship with the cardholder for an individual transaction. It will seek the highest price the market will bear and may even engage in price gouging. Simply, there is relatively little incentive for the ATM owner not to do so.

 

The card-issuing bank, in contrast, has a long term relationship with the card holder. ATM access is only one of several products the bank offers. Thus, it will generally offer ATM access at an attractive price in order to keep the cardholder interested in the other products offered by the bank. A bank will be reluctant to ''gouge'' its customer for ATM access (or extract its full economic rent), because it wants the customer to be interested in other higher margin products. That is why consumers benefit by having the card-issuing bank solely price ATM access.

 

Thus, surcharging would impose ''externalities'' that would inevitably be borne by the card-issuing bank.17 First, surcharging will at least initially result in customer confusion and complaints directed to the card-issuing institution, rather than to the ATM owner. Such confusion and complaints will result in additional costs (e.g., responding to complaints and educating customers) and damage to customer relations. Similarly, price gouging by ATM owners at locations where cardholders are not in a position to search for a lower price alternative will leave cardholders angry at the card-issuing bank or the ATM network over what they regard as outrageous conduct. Finally, and perhaps most important, the loss of card-issuer control over the price paid by the card-issuers' depositors for banking services generally, or ATM services specifically, will make it more difficult to implement procompetitive pricing strategies by offering free (or discounted) ATM usage at all locations or by bundling ATM fees with other services. Thus, the incentives for banks to offer lower price or free ATM access will diminish.

 

Reduced Competition

 

Perhaps the most harmful effect of surcharging will be the effect on competition for retail deposit accounts. Currently, ATM access is an important dimension of competition between financial institutions for deposit accounts. Banks compete in two dimensions: access (offering a large number of ATMs where the card may be used) and price (the charge for ATM transactions). The level of price competition is relatively constant: most banks charge foreign fees for network transactions -- which usually exceed their cost. Some banks, especially small banks and credit unions, compete by offering free or relatively low-cost ATM access.

 


Surcharging may actually diminish the incentives to compete on the price of ATM access. Consider a typical metropolitan area where one bank (we will call it ''McBank'') has a 30 percent market share in retail deposits. McBank seeks to attract depositors from its competitors. One important element of the retail deposit package is low-cost ATM access. Thus, in order to attract retail deposit accounts McBank has to offer ATM access at a lower price than its competitors: it will lower the price of ATM access or perhaps provide free ATM access. Its competitors may respond in turn and lower their prices.

 

Surcharging may turn that competitive strategy on its head. In a surcharging environment, McBank can assess surcharges on the customers of competing banks. McBank will not assess these fees on its cardholders. To attract cardholders from competing banks, McBank will raise its surcharges, and suggest that these cardholders transfer their accounts.18 Ultimately some cardholders of competing banks will migrate to McBank to avoid the surcharges. Instead of lowering the price of ATM access to attract customers, McBank will achieve the same objective, perhaps more effectively by raising prices. Eventually, cardholders at these other banks will decide that these costs are too great and will move their accounts to McBank.

 

Competing by lowering prices is what the free enterprise system is about. Surcharging introduces a perverse form of competition: driving your rivals out by raising their costs.

 

Harm to small banks and credit unions

 

One issue that received careful attention at the recent Senate hearings was the impact of surcharge policies on small banks and credit unions.19 Because of their small card base, these institutions deploy few if any ATMs, but instead rely on the ATMs of the shared network to which they belong. Interestingly, although ATM service is clearly a large cost, these institutions offer free or low-cost ATM access more often than larger institutions.

 


Surcharging provides a new tool for larger banks to drive depositors from these smaller banks. Large banks can raise the costs of these smaller banks by assessing surcharges. Eventually, cardholders of these smaller banks, tired of paying these additional costs of ATMs, will move their accounts to the large banks.

 

Is this type of raising rivals' costs strategy a fantasy?  Only time will tell. This strategy may already be in use by banks that dominate individual markets. For example, in Minnesota, smaller banks have complained that the dominant banks have refused to interconnect with the shared network in which the small banks participate. This practice makes it increasingly difficult for the small banks to offer adequate ATM access to their depositors and effectively compete with the large banks for retail deposits.20

 

Continuing restrictions or prohibitions on surcharges

 

Some ATM networks may claim that they were effectively forced to abandon surcharging because of the threat of antitrust litigation. However, Judge Pointer's decision provides a clear precedent for the legality of prohibiting surcharges. His decision makes clear that prohibiting ATM surcharging is efficient and pro-consumer. Moreover, there are several less restrictive approaches for controlling ATM fees. For example, a network could cap surcharges or limit surcharges to off-premise locations.

 

One proposal, suggested by the Consumer Finance Project, is to prevent the ATM owner from collecting both the surcharge and the interchange fee. In this way, at least the costs of the card-issuing bank will be reduced, and perhaps these costs savings will be passed on to consumers in lower foreign fees that stem from the interchange fee. Interestingly, the PLUS board of directors adopted this proposal about a year ago, but it was not enacted by the VISA board.21

 

Some might question whether restricting or capping ATM surcharges could run afoul of the antitrust laws as a form of price fixing. Although the question is not wholly without doubt, there is plenty of authority that suggests that such price caps would be upheld. As then-Judge Stephen Breyer held in a case involving price caps on doctors' fees:

 


The Congress that enacted the Sherman Act saw it as a way of protecting consumers against prices that were too high, not too low. [Courts] should be cautious -- reluctant to condemn too speedily -- an arrangement that, on its face, appears to bring low price benefits to the consumer.22

 

More state regulation and antitrust litigation Some networks may believe that by permitting surcharges the threat of antitrust litigation and state regulation will diminish. They may be sadly mistaken.

 

The legislative battles are just beginning. Consumer groups and small banks are calling for regulation or prohibition of surcharges. Congress (led by Congresswoman Roukema and Senator D'Amato) is already considering legislation either to ban surcharges or require stiff consumer disclosure.23  Although legislation may not pass Congress, ATM networks can expect many legislative battles in Washington and in many state capitals.

 

Antitrust litigation, which is costly, time-consuming, and high risk will not disappear. Recall that the purpose of the ATM interchange fee is to compensate institutions for the costs of deploying ATMs. Interchange fees have been attacked in the past as illegal price fixing. The fees survived because they were necessary to assure the recovery of the ATM owner's costs.24 Now that ATM owners can recover their costs through a surcharge, the interchange fee seems unnecessary. Thus, card-issuing banks could challenge the interchange fee as illegal price fixing and, if successful, collect treble damages. Antitrust lawyers may prosper in this environment; banks and ATM networks will not.

 

The Need for Better consumer disclosure

 

Consumer protection plays an important role in assuring that consumers perceive payment systems as reliable and fair.

 


For ATM surcharges to be competitive, consumers must be aware of the fees being assessed and voluntarily choose to pay them. Consumers can only choose between lower and higher cost ATMs if the fees are disclosed on the machine. Absent effective disclosure, consumers face the risk of price gouging. Moreover, consumers should also have the opportunity to decline to make a surcharged transaction without incurring any additional fee. Unfortunately, the consumer disclosure requirements of surcharges are a tattered patchwork quilt of federal and state regulations.

 

Surcharge disclosures are governed by regulation E, which is promulgated by the Federal Reserve Board. Reg. E requires the ATM owner to disclose the existence of a surcharge on a sign on the ATM or on the screen.25 The regulation, which was first enacted in the 1980s, does not require the ATM owner to disclose the amount of the surcharge; nor does it permit the consumer to cancel the transaction once he or she knows of the surcharge.

 

The states have taken a variety of approaches to protecting consumers. As the chart at Appendix A notes, several states have gone beyond the federal regulation and imposed more stringent consumer disclosure requirements, including interactive, on-screen notice and permitting cancellation of the transaction without penalty. In the view of these states, the federal regulation may not be adequate.

 

All ATM networks operate in several states and some operate nationwide. An environment where states impose disparate consumer disclosure requirements is neither efficient nor likely to enhance consumer confidence. Not surprisingly, a recent U.S. PIRG survey found inconsistent compliance with the state and federal regulations.26 Thus, federal regulation or legislation seems necessary. An appropriate approach may be that taken in Congresswoman Roukema's proposed legislation, which requires: (1) an on-machine sign that discloses both the existence of the surcharge and its amount, (2) disclosure of the surcharge on the ATM screen, and (3) the ability of the consumer to cancel the transaction once he or she learns of the surcharge. With this level of disclosure, consumers will not only be aware of the fee before they conduct the transaction, but they can also comparison shop, since the surcharge amount is disclosed on the ATM.

 

Impact on networks

 


The most uncertain area is the impact of surcharging on shared ATM networks. On the one hand, surcharges may diminish the number of network transactions, because consumers may seek out their own bank's ATMs in order to avoid surcharges.27 On the other hand, if surcharges lead to the deployment of more off-premise ATMs, network volume may grow.

 

Even more unclear is the effect of surcharging on the ''governance'' of networks. ATM networks involve a delicate balance between card issuer and ATM owner interests. Until now those interests did not diverge because practically all members were both card issuers and ATM owners. Moreover, since the ATM network provided benefits at relatively little cost, it seemed like a worthwhile investment for all.

 

Surcharging may change this cooperative balance. And surcharge revenue will upset the balance between card issuers and ATM owners. Second, surcharging offers some banks the opportunity to impose costs on the other members of the venture. If a network becomes a forum for raising rivals' costs, rather than collective costs savings, the long-term utility of the network may be in doubt.

 

CONCLUSION

 

ATM networks involve a delicate mix of costs and benefits. Until now that delicate balance has survived because members have used the network to compete in terms of offering lower prices and better services to their card holders. ATM surcharges will distort that balance by providing an opportunity for non-banks and large banks to impose new costs on smaller banks and their card holders. In turn, surcharging may lead to more disputes between network members which will ultimately be resolved by the legislatures and the courts.


[1]  David A. Balto is the attorney advisor to the Chairman of the Federal Trade Commission. Previously, in private practice, he represented several ATM networks, and was counsel to the PULSE network in the arbitration discussed in this article.  This article does not represent the views of the Commission or of any individual commissioner.

 

2  ATM interchange fees have been remarkably stable for decades, even though the costs of ATM deployment have fallen.  That could suggest that these fees are not being set in a competitive fashion.  Some commentators have suggested that the collective setting of interchange fees is a violation of the antitrust laws, although the practice has been upheld by the courts.  Compare National Bancard Corp. (''NaBanco'') v. VISA USA, 596 F. Supp. 1231, (SD Fla. 1984), aff'd, 779 F.2d 592 (11th Cir.), cert. denied, 479 U.S. 923 (1986) (upholding challenge to collectively set interchange fees) with  Dennis Carlton & Alan Frankel, The Economics of Credit Card Networks, 63 Antitrust L.J. 643, 665-66 (1995) (describing why NaBanco was in error).

3  Besides the interchange fee described herein, ATM networks also assess a membership fee for each bank member, and a ''switch fee'' for each transaction sent through the networks switch.  The switch fee is paid by the card-issuing bank for each transaction.  For a complete description of the types of fees assessed by ATM networks, see Karen L. Grimm & David A. Balto, Consumer Pricing for ATM Services: Antitrust Constraints and Legislative Alternatives, 9 Georgia State Law Review 839 (Spring 1993).

4  See testimony of Janice Shields before the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Banking and Financial Services (April 25, 1996), at 5.

5  Id.

6  For a detailed discussion of the antitrust risks faced by ATM networks in setting fees collectively, see David A. Balto, Antitrust Analysis of Financial Institution Joint Ventures, 16 World Competition: Law and Economics Review 107

(June 1993).

7  In re Arbitration Between First Texas Savings Ass'n and Financial Interchange, Inc., 55 Antitrust & Trade Reg. Rep. (BNA) No. 1380, at 340 (Aug. 25, 1988)

8  After several years, the effect of the new surcharge policy is a matter of controversy.  Compare Letter of Stan Paur, President, PULSE network to Congresswoman Marge Roukema (May 2, 1996) (describing competitive benefits of surcharge policy, especially in terms of additional ATM deployment) with ATMs: Are Texans Paying More? Consumers Union (June 24, 1996) (criticizing increased costs of ATM access for Texas consumers).

9  See Valley Bank of Nevada v. PLUS System, Inc., 749 F. Supp. 223 (D. Nev. 1989), aff'd, 914 F.2d 1186 (9th Cir. 1990).

10  1995 U.S. Dist. LEXIS 16232, 1995-2 Trade Cas. (CCH) P 71,219 (ND Ala. Aug. 10, 1995).

11   Id. at 75,906.

12  See testimony of Paul A. Allen, Vice President and General Counsel, VISA U.S.A., before the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Banking and Financial Services (April 25, 1996) at 8.

13  See New Math Renews Old Surcharge Debate, Bank Network News (Sept. 13, 1995) (describing action of First Interstate to remove logos of ATM networks that prohibited surcharges).

14  The leading treatise in the area notes a wide variety of arrangements between banks and retailers in deploying ATMs at retail locations.  See Donald I. Baker & Roland E. Brandel, The Law of Electronic Fund Transfer Systems, 6-13 (3d ed. 1996).

15  See testimony of Janice Shields before the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Banking and Financial Services (April 25, 1996).

16  See Mastercard Relents; Begins Surcharging, EFT Report (March 13, 1996). 16.   Surveys have shown that consumers who are unhappy with surcharges direct their dissatisfaction to the card-issuing institution rather than the ATM operator.   See Baker & Brandel, supra note 13 at 6-44 (survey in PULSE network found that customer would complain to his own bank 86.3% of the time).

17  Surveys have shown that consumers who are unhappy with surcharges direct their dissatisfaction to the card-issuing institution rather than the ATM operator.   See Baker & Brandel, supra note 13 at 6-44 (survey in PULSE network found that customer would complain to his own bank 86.3% of the time).

18   Some banks have already implemented this strategy. See ATM Surcharging Survey Six Months After the Ban Ends (Oct. 1996) U.S. PIRG at 3. See also Mellon, PNC Steeling Themselves for Backlash Against ATM charges, Am. Banker, Aug. 22, 1996, at 1 (describing impact of surcharge policy on small banks).

19   See Statement of the Community Bank League of New England before the Senate Banking Committee (July 11, 1996); Statement of the New York State Credit Union League before the Senate Banking Committee (July 11, 1996).  These groups came out in favor of a surcharge ban.  The Independent Bankers Association of America did not support the ban, but preferred a consumer disclosure alternative.  See Statement of the Independent Bankers Association of America before the Senate Banking Committee (July 11, 1996).        It suggested surcharges should be permitted if certain conditions were imposed, including limiting the compensation of the ATM owner to either the interchange fee or the surcharge, but not both and compensating the card-issuer for costs associated with supporting surcharging. See IBAA Favors Surcharging -- If Certain Standard are Met, American Banker (Sept. 5, 1996).

20  See An EFT Feud Prompts a Merger Challenge, Bank Network News, (April 11, 1996). Another network environment provides an intriguing, but imperfect, analogy. Many smaller airlines went out of business or were acquired during the 1980s. One of their complaints was that the larger airlines, which controlled the Computer Reservation System Networks, either denied access or raised the cost of these networks to handicap the smaller airlines.

21  See Surcharging:  The Issue that Keeps Coming Back, Bank Network News, Dec. 14, 1994 at 1.

22  Kartell v. Blue Shield, 749 F.2d 922, 930-31 (1st Cir. 1984) (finding that Blue Shield's ban on balance billing did not violate the antitrust laws), cert. denied, 471 U.S. 1029 (1985).

23   Congresswoman Roukema's bill, H.R. 3727, co-sponsored by Congressman Schumer, provides for extensive consumer disclosure of ATM fees.  The bill has been voted out by the Subcommittee on Financial Institutions and Consumer Credit of the House Banking Committee.  Senator D'Amato's bill, S. 1800, and a House bill sponsored by Congressman Sanders, H.R. 3221, would ban surcharges altogether.

24  See Balto, n.5 supra.

25  61 Fed. Reg. 19662, 19672 (May 2, 1996).  The prior version of the rule required disclosure on both the ATM and on the screen.  12 C.F.R. 205.9(a)(1) (1995).

26 

27  The preliminary evidence suggests this might be the case.  See Wall Street Journal, June 6, 1996 at A-1 (describing how network volume diminished by as much as 10% once surcharges imposed). A recent consumer survey found that in response to surcharging nearly 50 percent of consumers said they would use only their own banks ATMs. See ATM Surcharging Survey Six Months After the Ban Ends U.S. PIRG (Oct. 1996) at 4.