Cash withdrawals at new ATMs prove expensive for consumers

Banks and cash machine companies in dispute over fees

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The use of the new Nosto cash machines is proving to be expensive for consumers. Most banks have decided to charge a hefty fee from customers withdrawing money from their accounts on anything other than an Otto machine. Tapiola, Aktia, and S-Bank are not yet charging fees, but they are following the situation.
      “We might start charging a fee”, says Harri Lauslahti, CEO of Tapiola Bank.
     
More than 40 Nosto cash machines, run by Eurocash Finland, have sprung up in recent months, alongside the familiar Otto ATMs. Meanwhile, the first Anna cash machines, operated by Suomen Käteisnosto, are to be installed at the end of February.
      The banks that are behind Automatia, the company which operates the Otto machines, are taking a dim view of the newcomers.
      The banks do not charge any fee for the use of the Otto machines by their customers. Nordea and the OP cooperative banks charge customers using other bank machines one euro, in addition to two per cent of the amount of the withdrawal. This amounts to EUR 1.20 for a withdrawal of ten euros - a full 12 per cent of the sum.
      The possibility to withdraw sums as low as ten euros has been a major marketing strategy for the Nosto ATMs.
     
The banks say that they are charging the fees because the new cash machines prove to be significantly more costly for them than the Otto machines.
      The owners of the cash machine charge the bank of the person making the withdrawal a fee, which the banks pass on to their customers.
      Matti Korkeela, director of the OP-Pohjola Bank and the Chairman of the Board of Automatia, says that the charges imposed by the newcomers are many times those of Automatia, which is owned jointly by Nordea, Sampo, and OP-Pohjola.
      The costs of a transaction with Otto are a secret, but it is said to be “in the tens of cents” for each withdrawal.
      The service charges of the new ATM companies are about one euro per transaction.
      Korkeela notes that there are other costs involved as well.
     
Lauslahti of Tapiola Bank agrees, even though his bank is not a partner in Automatia.
      “The present system maintained by Automatia is very cost-effective”, Lauslahti says.
      Harri Koivula, CEO of Eurocash Finland, feels that banks exaggerate the price differences and are simply squeezing money out of their customers.
      “The prices are not public, but under no circumstances are the fees charged by the banks based on costs. They are excessive”, Koivula says.
      The Finnish Competition Authority is currently examining the pricing and the fees. The office plans to decide in the autumn if the banks are unfairly restricting competition in the cash machine business.
      “It would seem to be that there is some investigating to do, even if the differences in costs are taken into consideration”, says director Kirsi Leivo of the Finnish Competition Authority.
     
What if the banks are allowed to keep their fees? Will the new entrepreneurs be flushed out of the market?
      “We need to assess at least at what pace we will introduce new machines if the situation remains the same as it is now”, Koivula says.
      Suomen Käteisnosto, which is introducing the Anna machines, does not believe that the fees will hurt its business.
      “We believe that as is the case in other parts of Europe, consumers in Finland will be willing to pay a small compensation for getting cash without queueing, and from places where there are no Otto machines”, CEO Henrik de la Chapelle says.
     
One thing that the entrepreneurs have achieved from the consumers’ point of view is that Automatia, which has been reducing the number of its Otto machines, has now decided to maintain its current number of 1,600 ATMs.
      “We do not plan to reduce the number of machines”, Korkeela says.
      On the other hand, increasing numbers of users of the Otto machines appear to be ready to pay extra for cash; Korkeela says that about one per cent of cash withdrawals involve credit cards, which do incur a fee. Nordea says that the amount is as high as ten per cent.


Previously in HS International Edition:
  More than 500 ATMs to be installed in R-Kiosks across Finland (14.3.2008)

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